Kevin Brennan: I do not have that figure to hand, but there have been prosecutions, as the hon. Gentleman knows. There is also the provision to have parental contracts and, where necessary, parental audit as well, on attendance at school. The recent figures show that those are being used quite widely by local authorities.

Margaret Moran: Is my right hon. Friend aware that some of the most astonishing support for parents in Luton comes through the family workers who are attached to our children's centre, who offer one-stop support to families, often in crisis situations, and encourage family learning and increasing literacy? Will she consider extending the use of family workers across all schools, as I saw, for example, last week at Hart Hill nursery children's centre—

Jim Knight: Planning investment in schools is a local matter. In October, we announced the allocation of £52.8 million to Swindon borough council from 2008 to 2011 to support improvement to its school buildings and facilities. That included £14.9 million to start the primary capital programme. We will in due course discuss with Swindon its primary school plans, and those for its secondary schools when it is prioritised in the building schools for the future programme. The Government will, of course, deliver in full on that programme to my hon. Friend's constituents.

Mr. Speaker: Order. We come to topical questions to the Secretary of State for Children, Schools and Families. May I point out that two members of the Opposition Front Bench have put down their names to intervene in these topical questions? In future, I shall expect only one to do so. However, this time I shall let the matter go, given that it is Christmas.

David Laws: Mr. Speaker, may I wish you and other hon. Members a happy Christmas? I do not like to be gloomy on this occasion, but will the Secretary of State explain why the figures last week showed that Britain is bottom of the league table of social mobility? Why has the situation become no better in the past 10 years?

Edward Balls: The fact is that the reforms that we have been putting in place over the past 10 years are designed to ensure that we break the link between poverty and educational achievement in our country. Children who receive free school meals have seen their results rise faster in the past five years than the average child. That shows that reform is working, but there is a long way to go. It will be taken forward only by a Government who are determined to break that link, which will be found only on the Labour Benches.

Beverley Hughes: If the hon. Lady had read the Hedra report properly, she would have seen that it stated that the £3 billion that the Government have put into the free entitlement is sufficient. The hon. Lady is right to say that some private nurseries in some parts of the country are experiencing difficulties, and there are two reasons for that. First, local authorities need a better way to distribute the money. However, Hedra also said that most private providers need to be more sophisticated in equating prices with costs. They charge the same amount for under-twos as for three and four-year-olds, but if they were to price it according to the cost, taking into account the reduced staffing they would need, they would probably be able to pay for it with what the local authority gives them. There are tasks for both sides—for local authorities and private providers—but the total quantum of £3 billion is sufficient.

John Mann: When a primary school is the worst performing primary school in a local education authority year after year, does the Secretary of State believe that it is his role directly to intervene to sort that school out?

Edward Balls: In the final resort, the answer to that question is yes. First of all, however, it should be the responsibility of the governors or, if not, the local authority to use their powers to intervene to tackle such failure. If, in the end, the local authority does not do that, I have the powers to intervene and I am happy to use them.

Nick Gibb: This is a question for the Secretary of State. From September next year, every 14-year-old will have the right to study the society, health and development diploma if they wish to do so, and from 2009, they will have the right to study the hair and beauty diploma. Apart from those achieving level 6 in science, however, no student will have the right to study the three separate sciences—physics, chemistry and biology—at GCSE. Does not this confirm the comment by the Nobel laureate Sir Martin Evans that the Government lack an understanding of science and underestimate its importance to society?

Anne McIntosh: During 2008, the Government are to make changes to key stage 3 and GCSE courses in key stage 4, and to AS levels and AS syllabuses, as well as introduce diplomas. Is it right to cut the budget by 1 per cent for efficiency savings?

Diane Abbott: The Secretary of State will be aware that a disparaging reference was made earlier to homes in which English is not spoken. It is extremely desirable that all our residents should learn to speak English, but it is worth noting that some of the best achieving children in our schools are those for whom English is not their first language and that some of the worst achieving children are those from homes in which nothing but English is spoken.

Gordon Brown: With permission, I would like to make a statement about the European Council held in Brussels on 14 December. It focused on two major concerns: first, the reforms that Europe must make to meet and master the global challenges we face with competitiveness, employment, secure energy and climate change; and, secondly, issues of security, in particular in Kosovo, Iran and Burma, that we must confront together.
	I start with the most immediate concern facing the summit: the best way to bring about a satisfactory resolution to the status of Kosovo. Kosovo is the last remaining unresolved issue from the violent break-up of the former Yugoslavia; and in the light of recent failures by the parties in the Troika process to find a negotiated way forward, the European Council accepted its responsibility for joint European action and agreed the importance of urgently moving towards a settlement. It is to the credit of all parties in the dispute that, even when faced with conflicting positions, the region remains at peace. As the European Council conclusions noted, it is essential that this commitment to peace is maintained.
	The principles of our approach are, first, that Europe take seriously its special responsibility for the stability and security of the Balkans region. Indeed, it is also thanks to the sustained efforts of NATO troops and the diplomacy of the United Nations and the European Union that a safe and secure environment has been maintained. Secondly, however, we were agreed that the status quo is unsustainable and that we needed to move towards a settlement that ensures what the European Council called a "stable, democratic, multi-ethnic Kosovo committed to the rule of law, and to the protection of minorities and of cultural and religious heritage".
	Thirdly, after a detailed discussion at the Council, we were also wholly united in agreeing that European engagement should move to a new level. We agreed in principle and stated our readiness to deploy a European security and defence policy policing and rule-of-law mission to Kosovo. That will consist of a multinational mission of around 1,800 policemen and judicial officials, of whom I can confirm that the UK will contribute around 80, including its deputy head, Roy Reeve. European Foreign Ministers will confirm the detailed arrangements for this mission shortly.
	Fourthly, we also reaffirmed that a stable and prosperous Serbia fully integrated into Europe is important for the stability of the region. The Council encouraged Serbia to meet the necessary conditions to allow signature of its stabilisation and association agreement with the EU and we expressed our confidence that Serbia has the capacity to make rapid progress subsequently towards candidate status. The conclusions of the meeting of European Foreign Ministers also reiterated the European Union's support for enlargement more generally. We look forward to recognising the progress made by both Croatia and Turkey at this week's accession conference in Brussels.
	The UN Security Council will discuss the issue of Kosovo with representatives from both Belgrade and Pristina on 19 December. The aim is to give Russia an opportunity to accept a consensus on the way forward. If that proves impossible, we— Britain—have always been clear that the comprehensive proposal put forward by the UN special envoy, based on supervised independence for Kosovo, represents the best way forward. While we are rightly focused on the immediate priority of bringing the status process through to completion in an orderly and managed way, the European Council also agreed that it is important that we address the long-term challenge of ensuring Kosovo's future economic and political viability. I welcome the commitment made by the European Union, to assist Kosovo's economic and political development, for a donors conference to follow shortly after a status settlement.
	The Council also discussed Iran. There was agreement on a united European approach. Again, the power we wield working together with all the European Union is greater than if we act on our own.
	I have made it clear repeatedly that Iran remains in breach of its international obligations. In September, Foreign Ministers agreed that unless there were positive outcomes from Solana and the International Atomic Energy Agency's discussions with Iran, we would seek tougher sanctions at the UN. The latest assessment is that sufficient progress has not been made.
	The European Council conclusions call on Iran to provide full, clear and credible answers to the IAEA, and to resolve all questions concerning its nuclear activities. We reiterated our support for a new UN resolution as soon as possible, and agreed to decide on new measures that the EU might have to take to resolve the situation at the January meeting of Foreign Ministers. Those should complement UN measures, and not substitute for them if the Security Council cannot reach agreement.
	Iran has a choice: confrontation with the international community leading to a tightening of sanctions; or, if it changes its approach, a transformed relationship with the world from which all would benefit.
	The EU also reaffirmed its deep concern about the unacceptable situation in Burma, and made it clear that if there is no change in the Burmese regime's approach to political negotiations and basic political freedoms, we stand ready to review, amend and—if necessary—further reinforce restrictive measures against the Burmese Government. We also reaffirmed the important role of China, India and the Association of South East Asian Nations in actively supporting the UN's efforts to establish an inclusive political process leading to genuine national reconciliation.
	For our part we believe that the forthcoming visit of Professor Gambari, the UN envoy, is critical. It is essential that the Burmese Government meet the demands set out in the UN Security Council statement: to release all political prisoners; to create the conditions for political dialogue, including relaxation of restrictions on Aung San Suu Kyi; to allow full co-operation with Gambari; to address human rights concerns; and to begin a genuine and inclusive process of dialogue and national reconciliation with the opposition. In particular, the regime should respond to the constructive statement of Aung San Suu Kyi on 8 November and open a meaningful dialogue with the opposition and the country's ethnic groups.
	The Council also agreed that a key part of the EU's external agenda is how we can, by working together, maximise our influence in tackling global poverty. The European Commission should report by April next year—halfway to the 2015 millennium goals date—on how the EU is meeting its commitments to those goals, and how we can accelerate further progress.
	In addition to those issues of international security and development, the Council conclusions and the special declaration on globalisation set out the challenges that the European Union must address on globalisation. We agreed to maintain our focus on economic reform, with a renewed focus on modernising the single market so that it enhances Europe's ability to compete in the global economy. We must have full implementation of the services directive by 2009. We must continue to work towards further liberalisation in energy, post and telecoms, where market opening could generate between €75 billion and €95 billion of extra benefits and contribute 360,000 jobs. Investment in research, innovation and education—and removing barriers to enterprise—are also essential.
	We reaffirmed our commitment to free trade and openness, and the priority of securing a successful Doha world trade round, which would lead to benefits approaching $200 billion, bringing significant benefits to rich and poor countries alike. We will also propose and support better EU-USA trade links.
	We agreed too to do more to develop mechanisms for co-operation within the EU to tackle issues such as security challenges in relation to terrorism, illegal immigration and organised crime. We renewed our commitment to the EU counter-terrorism strategy and to co-operation on counter-radicalisation work. We will work together to deliver our commitments to tackling climate change, including the target of a reduction in emissions. Building on the significant progress made in Bali last week—an agreement on which the Secretary of State for Environment, Food and Rural Affairs Secretary will report to the House tomorrow—we must help to negotiate an ambitious post-2012 international climate change agreement. We agreed that Europe must also step up funding, including funding through the World Bank, to help the developing world to shift to lower carbon growth and adapt to climate change.
	It was agreed at the last Council meeting that the presidency would propose the establishment of a new reflection group. That was announced in October. At this later meeting, the Council invited Mr. Felipe Gonzalez Marquez, assisted by two vice-chairs, Mrs. Vaira Vike-Freiberga and Mr. Jorma Ollila, Chairman of Shell and Nokia, to
	"identify the key issues and developments which the Union is likely to face in 2020 or 2030 and to analyse how these might be addressed".
	The remit states specifically that
	"it shall not discuss institutional matters. Nor should its analysis constitute a review of current policies or address the Union's next financial framework".
	The group will report back to the Council, which will decide how to follow its recommendations.
	I can also tell the House that today we are publishing the European Union (Amendment) Bill, which contains the institutional changes to accommodate a Europe of 27 members, and will include the safeguards that we have negotiated to protect the British national interest. They consist of the legally binding protocol which ensures that nothing in the charter of fundamental rights challenges or undermines the rights already set out in UK law, and that nothing in the charter extends the ability of any court, European or national, to strike down UK law; legally binding protocols which prescribe in detail our sovereign right to opt in on individual justice and home affairs measures when we consider doing so to be in the British interest, but alternatively to remain outside if that is in our interests; a declaration that expressly states that nothing in the new treaty affects the existing powers of member states to formulate and conduct their foreign policy, and that the basis of foreign and security policy will remain intergovernmental, a matter for Governments to decide on the basis of unanimity; and an effective power of veto on any proposals for important changes on social security, so that when we—Britain—determine that any proposal would have an impact on an important aspect of our social security system, including its scope, cost or financial structure, we can insist on taking any proposal to the European Council under the unanimity provision.
	With the publication of the Bill, Parliament will now have an opportunity to debate this amending treaty in detail and decide whether to implement it. We will ensure that there is sufficient time for debate on the Floor of the House, so that the Bill can be examined in the fullest detail and all points of view can be heard. That will give the House the fullest possible opportunity to consider the treaty, and the deal secured for the UK, before ratification.
	In addition, I can tell the House that we have built into the legislation further safeguards to ensure that there is proper parliamentary oversight and accountability. So that no Government can agree without Parliament's approval to any changes in European rules that could in any way alter the constitutional balance of power between Britain and the European Union, there is a provision in the Bill that any proposal to activate the mechanisms in the treaty which provide for further moves to qualified majority voting but which require unanimity—the so-called passerelles—will have to be subject to a prior vote by the House. In the event of a negative vote, the Government would refuse to allow the use of the passerelle. The Bill also includes a statutory obligation that any future amendments to the treaty, including amendments that provided for any increase in the EU's competence, would have to be ratified through an Act of Parliament; so Parliament would have absolute security that no future change could be made against its wishes.
	I said in October that we would oppose any further institutional change in the relationship between the EU and its member states, not just for this Parliament but for the next, and I stand by that commitment. This is now also the settled consensus of the EU. All 27 member states agreed at the Council—and it was expressly set out in the conclusions—that this amending treaty provides the Union with a stable and lasting institutional framework, and that it completes the process of institutional reform for the foreseeable future. The conclusions of the Council state specifically that the amending treaty
	"provides the Union with a stable and lasting institutional framework. We expect no change in the foreseeable future".
	Let me conclude with the discussion on the most immediate of economic issues discussed: concerns about the economic consequences of the global financial turbulence that started in America in August. The Government's first priority in the coming weeks is to ensure the stability of the economy and to have the strength to take the difficult long-term decisions necessary. The Council agreed that the whole of the EU must now turn its attention to both the immediate measures necessary and the long-term strengthening of international capacity to secure greater financial stability. The announcement earlier this week by central banks in the major financial centres that they will provide liquidity to ease tension in the financial markets must now be built upon.
	As we agreed, supervisory authorities in different countries need to co-operate effectively across borders in exchanging information and in the management of contagion. The European Council conclusions emphasised that macro-economic fundamentals in the EU are strong and that sustained economic growth is expected, but we concluded that continued monitoring of financial markets and the economy is crucial, as uncertainties remain. The Council underlined the importance of work being taken forward both within the EU and with our international partners to improve transparency for investors, markets and regulators; to improve valuation standards; to improve the prudential framework, risk management and supervision in the financial sector; and to review the functioning of markets, including the role of credit rating agencies.
	The European Council will discuss these issues at its spring 2008 meeting on the basis of a progress report from the Council of Finance Ministers and the financial stability forum. As agreed by Chancellor Merkel, President Sarkozy and I in October, the progress report should examine whether regulatory or other action is necessary. I have invited Chancellor Merkel and President Sarkozy to London so that we can discuss the proposals in the paper we agreed and issued a few weeks ago—measures important to strengthening the international community's role in addressing financial turbulence, showing the importance we attach to taking the long-term decisions to ensure in testing times the stability of the economy.
	The conclusions of the Council state specifically that in the institutional framework we expect no change "for the foreseeable future". The protections that have been agreed in the amending treaty defend the British national interest. In the Bill introduced today, we are legislating for new protections and new procedures to lock in our protection of these interests. Europe is now moving to a new agenda, one that focuses on the changes needed to meet the challenges of the global era. I commend the statement to the House.

David Cameron: I thank the Prime Minister for his statement on the European Council in Brussels. I note that he could not bring himself to mention his visit to Lisbon.
	I am delighted that the Government have finally adopted our position of saying that Europe should focus on the real issues and not on institutional reform. However, the whole country will ask how he can possibly say that, having just signed up to an all-encompassing constitution that transfers powers from Westminster to Brussels and when he will not even put the constitution, with its massive institutional changes, to the British people in a referendum.
	Before turning to the constitution, let me ask about those areas where decisive action is needed: the Balkans, Iran and Darfur. On Burma, I very much agree with what the Prime Minister said. On the Balkans, clear signals are needed. Kosovo should not be left in limbo, no other border should be re-opened and military reserves should be deployed to demonstrate Europe's resolve. In terms of sending out these clear signals, does the Prime Minister agree that if Serbia wants to join the EU, she should co-operate fully with the war crimes tribunal, which means arresting Mladic and Karadzic and getting them to The Hague?
	On Iran, what is needed is a combination of engagement and sanctions. We have consistently argued that although the United States needs to do more in terms of engagement, Europe needs to do much more in terms of sanctions. What progress was made in Brussels in persuading other European countries that new export credits should be banned and that access for certain Iranian banks to the European financial system should be restricted?
	On Darfur, which I do not think he mentioned, the Prime Minister said three months ago that more than 20,000 troops and police were necessary. I agree. Today there are still fewer than 10,000. When will that shortfall be made up?
	Turning to the constitution, I have to say to the Prime Minister that the key issue is the referendum. Is it not the case that he simply will not restore trust in politics unless he keeps his promise to hold one? Labour Members of Parliament—staggeringly few of them are here today—put that commitment to a referendum in their election address; trade unionists voted for it in the TUC and every opinion poll shows that it is what people want. This issue is not going to go away. In trying to justify breaking his promise, the Prime Minister says that this treaty is not the constitution, but does he not understand that that simply will not wash? The German Chancellor, the Irish Prime Minister and the Spanish Foreign Minister all completely undermine what the Prime Minister says by saying that the treaty is pretty much the same as the constitution, and the author of the constitution, Giscard d'Estaing, said last month that the constitution's
	"essential points...reappear word for word in the new project. Not a comma has changed!"
	The Prime Minister's argument has simply collapsed. Does he not see that it is this sort of approach that makes him look shifty and untrustworthy? Does he not see that far from getting him out of his troubles, denying people a referendum is digging him in deeper? This treaty obviously is the constitution. It contains an EU President, a Foreign Minister and an EU diplomatic service, and it gets rid of the veto in 60 areas and contains a new ratchet clause which allows even more vetoes to be scrapped without a new intergovernmental conference. When I put that point to the Prime Minister last October, he claimed the measure was already there in the Single European Act. It was not. The new clause for the first time allows virtually any veto to be scrapped in any area. That measure was not in the Single European Act, nor in any treaty before this one. Once again, the Prime Minister is treating people like fools.
	So the Prime Minister has not been straight about the constitution, and that was only made worse by his frankly bizarre performance in Lisbon last week. Was he going or was he not going? Was he going to sign the treaty or was he not going to sign the treaty? Were the cameras going to record it or not? He could not summon up the courage to decide.
	Is this not all a pattern for this Prime Minister? We get troop withdrawals that have already happened, the election that never was, and now the signing ceremony that would not take place. There was not a word in the statement about actually signing the treaty. I expect that Macavity hopes we have forgotten about it already. Did not a senior diplomat get it right when he said of the Prime Minister's dithering that
	"he's ended up with the worst of all worlds...If he wants to send a Euro-signal that he's indecisive, he's just sent it"?
	As for the Foreign Secretary, in all the past centuries of British Foreign Secretaries representing this country overseas has there ever been a more ludicrous moment than that of this Foreign Secretary being so isolated and alone that the only person whose hand he could find to shake was the usher who had handed him the pen? Is it not the case that European leaders now see the Prime Minister in the same light as do the British people: not as the strong leader he posed as in July, but as a Prime Minister who has turned out to be weak, dithering—second rate would be a bonus with him—and not straight with people? Does he not recognise that the best chance he has got to redeem himself is to hold that referendum he promised?

Gordon Brown: In the spirit of Christmas, let us find where we do agree. We agree on Kosovo, where our aim, too, is supervised independence, the arrest of the Serbian criminals, and to ensure that there is a proper civilian as well as military presence from both the EU and NATO on the ground. We agree on Iran: obviously, the right hon. Gentleman agrees with me that, because the issue is enriched uranium, sanctions are necessary. We agree on Darfur, and I thank him for mentioning that as it gives me the chance to say that we are ready to step up both sanctions and activity in relation to Darfur if we do not get the co-operation of the Government there.
	As the right hon. Gentleman said, we also agree on Burma. However, I am surprised that when we are debating the issues that arose from the European Council—and I rather suspect he wrote his contribution before he looked at its conclusions—he does not mention the declaration on globalisation, the commitment to economic reform, what we have done on the environment together, and what we continue to do on the financial stability issues, none of which he seems to think important because the only issue that obsesses the Conservative party is the European amending treaty. I have to ask him this question, then: if the Conservative party thinks that a referendum is so important, does it agree that even after ratification there would be a referendum? Some of the party think that there should be, but others think there should not. Will he tell us what his position is, because until he does so we will rightly say that he is all slogans and absolutely no substance?
	When it comes to the wording in the Bill that I have laid before the House today, I should correct the right hon. Gentleman. On passerelles, there will be a parliamentary vote on whether there should be any move from unanimity to qualified majority voting, and the Government will not be able to sign up to a passerelle change without the approval of the House of Commons. However, I have to tell him on the referendum issue that not one other country—except the Irish Republic, which is constitutionally bound to have a referendum—is proposing to have that referendum. The Dutch and the Danish have rejected it. The right hon. Gentleman has only two supporters in the European Union as he tries to find a new group. The Bulgarian party has now deserted him, and the Czech party has said only in the last few days that it wants to sign the treaty. It is not a constitutional treaty in their view, and if they did not sign the treaty it would lead, they said, to the international isolation of the Czech Republic.
	That is the view of the right hon. Gentleman's best ally in Europe; and perhaps I should repeat to him what the chairman of his democracy commission has said about this matter—that a European referendum would be "crackpot", "dotty" and "frankly absurd". Is it not about time that the Conservatives faced up to the big issues in Europe; that they accepted they we are trying to move Europe to a new agenda; that they joined that new agenda, which is about the environment, the economy and security; and that they stopped their obsession with the issues of the past?

Vincent Cable: I also welcome the statement, particularly the Prime Minister's comments on Kosovo, Iran and Burma, and his support for economic reform and free trade. I start by referring to the meetings that he did not attend, before getting on to the one that he did. He was absolutely right not to attend the EU-Africa summit. The European Union has a travel ban on Mugabe, and the Prime Minister was absolutely right to take a principled stand on that. The only doubt that I am left with is why, given his strong position on human rights, he did not take a comparably strong position on the King of Saudi Arabia. I suspect that Mr. Mugabe will be wondering whether the only way to get on the right side of the Prime Minister's principled view of foreign policy is to have some oil.
	The other meeting that the Prime Minister did not attend, of course, was the signing ceremony, and I am puzzled about the reasons for that. Either he could not organise his diary, which would be incompetent, or he could not make the effort, which would be discourteous. Alternatively, he was trying to send the conflicting signal that he did not like the treaty that he had agreed to. Whether it was duplicity, incompetence or discourtesy, it reflected badly not just on him but on the country as a whole.
	There is one way for the Prime Minister to redeem himself, which is to call a referendum: not, of course, on the narrow issue of the treaty, but on the broader question of whether Britain should remain a full member of the European Union—an issue on which nobody under the age of 50 has yet had an opportunity to vote. Perhaps I might remind the Prime Minister of what happened when we had a vote in the House of Commons on 14 November. His party and mine were united—on opposite sides of the argument. The Conservatives voted 149 against the referendum and six in favour, with 31 abstaining. If high principle does not appeal to him, perhaps low politics will, and he will come round to the idea of a referendum.
	On the specifics of the Prime Minister's statement, he was right to draw attention to the progress made on Kyoto and climate change, but can he clarify exactly what this means for the commitments of the United Kingdom? I tackled him at Prime Minister's questions a few weeks ago on the UK commitment to a 20 per cent. renewables use by 2020, and he replied by saying that that was not a commitment for the UK, but for the European Union as a whole. Somewhat earlier, on 1 March, his Foreign Secretary, who was then the Environment Secretary, said quite explicitly that this was a commitment for the United Kingdom specifically. Can the Prime Minister clarify—is that the Government's view, or was his statement in Parliament the correct view?
	On Kosovo, the Prime Minister is absolutely right to stress the danger of this situation. Several countries in the area could be sucked into it—Serbia, Montenegro, Macedonia and Bosnia—and we could well be faced with flights of refugees, as we have had in the past. The UK may well be called upon to play a role in a peacekeeping capacity.
	The question I have for him is: what is the ability of the British Government to play a role in a peacekeeping capacity when British armed forces are so overstretched? Is not the answer to this dilemma to withdraw the remaining few thousand troops in Basra, who are impotent in the face of the militias running amok there?
	Finally, may I ask the Prime Minister about the commitment of Finance Ministers and Prime Ministers to support additional liquidity in the world economy? There is a simple point: if £30 billion cannot save one small regional bank in Britain, what is the prospect of £50 billion saving the world economy?

Gordon Brown: I am pleased that the hon. Gentleman is making his appearance here as the acting leader of the Liberal party; it will elect a new leader tomorrow. I see that three former leaders of the Liberal party are with us today. He says that he has a new position on the referendum; but some members of his party want a referendum on the amending treaty, whereas others do not. So what has his party done? It has retreated to the position of 35 years ago whereby the party will have a referendum on whether we should be in the European Union at all. I suggest to him that that issue was resolved in 1975—it is in no need of being resolved again in this country.
	I turn to the hon. Gentleman's points about the specifics of the discussions. On Zimbabwe, it is right that we are agreed that it was wrong for Britain to be present at prime ministerial or Foreign Secretary level at the EU-Africa conference. However, if there is a change in Administration in Zimbabwe and in the respect for human rights, we stand ready to do what we can to help rebuild that country.
	On Kosovo, I agree with the hon. Gentleman that we need a military and civilian presence, but I do not agree with him that Britain cannot play its part with the small but important numbers that we are putting in both in civilian and military presence.
	On the renewables issue, I think the hon. Gentleman knows what our position is—I made it clear in the House of Commons. The EU is committed to a 20 per cent. renewables target. Discussion is taking place around the EU about what individual contributions will be made by the member states. We await the outcome of that discussion, and we will then receive a target that we will implement. This is the right way forward, and I hope that all parties in the House of Commons will provide support for dealing with renewables.
	Finally, the hon. Gentleman mentioned the European financial situation in the face of global turbulence. I hope that we will see co-operation across Europe to deal with what have been very difficult problems arising from events in America, where there has already been central bank co-operation. We are prepared to argue for more co-operation, which is why I have invited Chancellor Merkel and President Sarkozy to London to discuss the paper that we have already put forward for reform of the international financial institutions.

Mike Gapes: Does the Prime Minister agree that the Portuguese presidency deserves enormous credit for all the achievements that have occurred during its six months, and that the outcome of this meeting in Brussels also reflects on a lot of the preparatory work that it has done? He made reference to Kosovo. Did any discussion take place about a co-ordinated EU and United States recognition of an independent Kosovo, so that no precipitate and unwieldy approach to these matters is taken over the next two months and we get the smoothest possible international agreement of recognition at the same time?

Iain Duncan Smith: The Prime Minister says that he prides himself on letting Parliament have its say. Given that he has now made it clear that he and his Front Benchers will not stand by their commitment to have a referendum on the treaty, does he acknowledge that many of his Back Benchers stood on a manifesto commitment to do so? Should an amendment to hold a referendum be tabled during proceedings on the treaty, would he allow his Back Benchers a free vote, so that they can stand by their commitment?

Ken Purchase: The Council is right to be concerned about the position in Iran. The rhetoric coming from Tehran is dreadful, and equalled perhaps only by the wilder sources in Washington. However, does my right hon. Friend understand that the present sanctions are not hurting the big British, American and European countries in Iran, who are sourcing their goods through the Gulf countries, but smaller businesses and people in Iran? That is being used by Ahmadinejad to wind up the Iranian people against the west. Will my right hon. Friend use his best efforts to ensure that diplomacy is the way forward, including contact with the bodies in Tehran?

Gordon Brown: The treaty does not change competence in relation to fisheries at all. The fact of the matter is that the hon. Gentleman has got this wrong in asserting that the treaty does so.
	On the hon. Gentleman's first point about independence, I say to him that the latest survey shows that two thirds of Scottish people are against independence. They do not want it.

Gordon Brown: My hon. Friend will be part of the debate on the amending treaty when it comes before the House of Commons but, in the light of the EU-Africa summit, I should have thought that people would want closer contact between the African Union and the European Union.

David Heathcoat-Amory: The Prime Minister mentioned competitiveness and he will be aware that the British labour market is under threat from measures opposed by the Government on temporary workers and changes to the working time directive. However, is he aware that the new so-called reform treaty mandates new and additional measures in harmonising employment practices across Europe? Is he aware of those articles and can he tell the House whether he read all 257 pages of the treaty before he signed it?

Denis MacShane: Can the Prime Minister confirm that the treaty of Maastricht—the biggest sharing of power with our European partners—was signed by the most junior Foreign Office Minister on the Tory payroll at the time? So all this froth is just that. May I say how much I disagree with the Prime Minister when he said in his reply to the Leader of the Opposition that he hoped that the Conservative party would start to become sensible and engaged on Europe? I want the Conservatives to stay exactly where they are, because they will never be elected to power. In his statement, he said, that now
	"we can, by working together, maximise our influence".
	That is the European Union—utterly opposed to the isolationism of the Conservative party.

Charles Kennedy: I welcome the eventual UK signature on the draft treaty, however clumsily we got there, but does the Prime Minister acknowledge that, as we move into ratification scrutiny here, it is not just going to be a matter of winning votes in Parliament? Those of us who support the treaty and Britain's future in Europe are going to have to start winning the argument in the country. Towards that end, may I make the following plea to him, and through him, to all his Ministers? They are not going to persuade the British public about the long-term merits of Europe by using Eurosceptical language to justify the treaty they have just signed. The Prime Minister was at it again this afternoon, saying, "We have safeguarded this," "We have defended that," and "We have seen off the following." Why does he not say, "The status quo that we have today, and what we have just put our names to as a country on your behalf, is an improvement"? Because that is what he believes—is it not?

Gordon Brown: It is what I said: the co-operation across Europe on the environment, security and the economy, and what we decided at the Council, is to the benefit of not just this country, but the whole world, and is something that we should push forward with. But it is also right for me to point out the inaccuracies in the statements that have been made from the Opposition Benches about what the amending treaty tries to achieve. As far as the charter of rights is concerned, it is not justiciable in British law. As far as foreign policy is concerned, it is still intergovernmental. As far as justice and home affairs are concerned, we have an opt-in and, in certain circumstances, an opt-out. As far as national security is concerned, it is not considered in the amending treaty. On social security, we have an emergency brake. It is right that we point out, against those who allege the opposite, what is happening. I agree with the right hon. Gentleman that there should be a campaign in the country to show people the benefits of the amending treaty and membership of the European Union, and we will work together on that.

Gordon Brown: While Turkey was not discussed in detail at the Council, it was the subject of previous Councils. I can assure my hon. Friend that it is a modern, reforming Turkey that we wish to be part of the discussions to join the European Union, and I hope that he would support me in that.

Gordon Brown: I should remind the Opposition that, in the case of the old treaty, which was rejected, nine countries proposed to have a referendum. Only one now proposes to have a referendum: Ireland. The reason that the Dutch, the Danish, the French and others have rejected a referendum is that the constitutional concept was abandoned.

Paul Flynn: Does not the gathering storm in Kosovo and its possible implications for our stretched armed services, mean that there is an even more urgent reason to re-examine not our general commitment in Afghanistan, but the particular commitment in Helmand province, which is failing to meet all its original objectives, at a grievous cost in human lives?

Gordon Brown: I do not accept what my hon. Friend says. Last week, I made it absolutely clear that the process in which we are involved in Afghanistan is one of moving towards greater Afghan control of their security by building up their military and policing forces, and having a programme of economic, social and political development that can benefit the Afghan people. I believe that there is wide support for that among the coalition. Yes, it is true that the purpose of being in Afghanistan was to remove the Taliban and to prevent al-Qaeda from getting control. However, it is also true that now that Afghanistan is a democracy, we must bolster it and help its economic, social and political development.

Patrick Cormack: As the Prime Minister has once again promised full debate on the treaty in Parliament, will he promise the House that there will be no timetable and that, if Parliament amends the treaty, he will listen?

Gordon Brown: That is a matter for the usual channels in the House. Many days will be allocated to the debate of this important amending treaty.

Alistair Darling: With your permission, Mr. Speaker, I should like to make a statement on the progress report by Kieran Poynter, chairman and senior partner of PricewaterhouseCoopers, on the loss of child benefit records at Her Majesty's Revenue and Customs. Before I turn to that, I can confirm that the police investigation continues, and although the searches are drawing to a close, their inquiry is not yet complete. However, the police have reiterated that they have no information or intelligence that the data have fallen into the wrong hands. They will keep that under review. The banks, too, say that they have found no evidence of any activities suggesting fraud arising from the incident, but they continue to monitor closely the accounts concerned, so they can see immediately if there is any unusual or irregular activity. As I told the House previously, the majority of accounts into which child benefit is paid are with a small number of banks, and those banks have checked the accounts back to 18 October—the date on which the missing data were posted. There are no reports of any activities suggesting increased fraud attempts deriving from the incident.
	I deliberately gave Mr. Poynter wide-ranging terms of reference because of the seriousness of the loss and my concern about previous losses of data, to which I referred in my statement on 20 November. Mr. Poynter started his review on 23 November, just three weeks ago, and as he says, his work is far from complete and his conclusions will develop as his work progresses. Inevitably, therefore, the report is short, but I said last month that I would return to the House when it became available. A copy has been placed in the Vote Office in the usual way.
	Kieran Poynter sets out the work that he has put in hand. He says that he has given priority to the immediate steps that Revenue and Customs must take to protect data security. It has already put in place a number of measures. Mr. Poynter says that they are measures that he would have recommended, and they are set out in his report. Mr. Dave Hartnett, the acting head of Revenue and Customs, said to the Treasury Committee on 5 December that the measures include the imposition of a complete ban on the transfer of bulk data without adequate security protection, such as encryption, as well as measures to prevent the downloading of data without adequate security safeguards. In addition, Revenue and Customs disabled all the personal and laptop computers it uses to prevent the downloading of data on to removable media; they will be reactivated only with the approval of a senior manager, and for a specific business-critical purpose.
	Mr. Poynter has also started his investigation into exactly what happened in relation to the loss, but he makes the point that there are more inquiries to be made and more interviews to be carried out, and there is to be greater examination of the evidence available. As he says, it would be wholly inappropriate for him to draw final conclusions until his work is completed.
	Mr. Poynter also draws attention to the responsibilities and accountability in Her Majesty's Revenue and Customs generally. Those issues are also referred to in the capability review on Revenue and Customs, carried out by an independent panel overseen by the Cabinet Secretary. The House will be aware that the review was commissioned as part of a general review of the strengths and weaknesses of all Government Departments, and was announced in July 2006. The review on Revenue and Customs is published today, along with the Treasury's review, and updates for four Departments. I am also publishing Revenue and Customs' autumn performance report.
	The capability review identifies a number of important strengths of Revenue and Customs, including a proven ability to bring in money to fund public services while driving down its own costs and delivering greater efficiency. It refers to committed people with honesty and integrity, and with a clear desire to transform and improve. The review also highlights a number of areas where improvements are needed; it mentions the need to set up a simpler structure, the need for clearer accountability, and the need to improve confidence and strengthen management information. The acting chairman agrees, and is announcing proposals to put in place a simpler organisational structure with clearer accountabilities. As Mr. Poynter says, that will make it easier to implement recommendations on data security as his review progresses.
	I said in my statement that the Prime Minister had asked the Cabinet Secretary to ensure that every Government Department checked their procedures for the storage and use of data, and to make recommendations on how to improve data handling procedures across government. His interim report is also published today, alongside a written ministerial statement by the Minister for the Cabinet Office. The Prime Minister has already announced that the Information Commissioner will have the power to conduct spot-checks on departments. There will also be new sanctions under the Data Protection Act 1998 for the most serious breaches of its principles. These will take account of the need not only to provide high levels of data security, but to ensure that sensible data-sharing practices can be conducted with legal certainty. We will consult early in the new year on how this can best be done. There is also a range of other measures, which are set out in the report.
	Revenue and Customs and, before that, the Inland Revenue and HM Customs and Excise have served successive Governments well. Their staff are dedicated and hard working. However, the loss of these data was extremely serious and should not have happened, and again, I apologise to everyone who has been affected. As I told the House in November, the loss of these data, together with losses in previous incidents, means that a wide-ranging review was necessary so that lessons could be learned, procedures tightened and security improved. Mr. Poynter tells me that he expects to conclude his work in the first half of next year, and I shall report back to the House when I have his final report. I commend this statement to the House.

Philip Hammond: First, I want to reiterate to the Chancellor the sense of anger and betrayal felt by millions of people at the loss of their children's data and their own data.
	Today the Chancellor has to explain HMRC's responsibility for the most catastrophic data security breach in British history, against a backdrop of its responsibility for the loss of confiscated drugs, money, passports and perhaps weapons, not to mention £5.7 billion of overpaid tax credits. In a few minutes another Cabinet Minister will bob up to admit to yet another serious data breach. What we and the public want is simple—a concrete assurance that such a catastrophic failure of data security will not happen again. As with every Treasury disaster, whether it is a failed bank or a lost disc, the starting point must be to establish exactly what happened and how it was allowed to happen. That is what the Poynter review was set up to do.
	The Chancellor told the House on 20 November that responsibility lay with a junior official who had broken the rules. That line started to unravel almost immediately. First, the National Audit Office produced e-mails that established the involvement of senior HMRC officials in an earlier decision not to filter data in response to NAO requests, which is confirmed at paragraph 16 of the Poynter interim report.
	Then data experts confirmed that the ability to download such a large volume of sensitive data to disc without authorisation signalled the absence of the most basic protections that should be built into any data-handling system. Finally, in the face of the mounting evidence, the acting chief of HMRC admitted that a systemic failure had occurred in that vast and unwieldy department cobbled together by the Prime Minister when he was Chancellor of the Exchequer.
	We will obviously study the Poynter interim report with great care and we look forward to the final report. We welcome the ban on transfers of bulk data and the disabling of computers to prevent downloading to disc, but why on earth was that simple precaution not already in place? We welcome, too, the publication of the long delayed capability review, recognising HMRC's need to rebuild its reputation with the public.
	Can the Chancellor answer the following specific questions? Can he confirm that it was the practice that passwords were included on a note enclosed with data discs, and did that happen on this occasion? Who was the most senior official to be made aware of the decision routinely to send unfiltered databases to NAO in order to save cost? At what level was the downloading of the data to disc authorised in this particular case, and if it was not authorised, how was it physically possible? Finally, now that he has had time to think about it, can the Chancellor answer the question that was put to him on 20 November: why were police not informed for four days after he personally was aware of the loss, and the banks not informed for six days?
	The question is not who put the discs in an envelope and dropped them in an unregistered mailbag. In any large organisation, stupid mistakes occur. That is why well run, functional organisations have data security systems in place—systems to ensure that sensitive data are filtered out of files, systems to ensure that large volumes of data cannot be downloaded to disc, systems to encrypt personal information, systems to track important material when it is sent off the premises, and systems to make sure of a swift and appropriate response, rather than dither and delay, when something goes wrong. We have a term for when such systems do not work: we call it systemic failure. Responsibility for systemic failure lies not with junior staff, but at the very top. Two long months ago, the Chancellor said on the BBC that what people
	"look to us to do is to deal with things that come up unexpectedly, and deal with that competently".
	They do indeed, and the Government have failed them. In the face of the overwhelming evidence of the systemic failure behind this disaster, the statement today can be described only as a wholly inadequate response from a wholly inadequate Chancellor.

Alistair Darling: First, I am grateful to the shadow Chancellor for taking the trouble to write to me to explain why he could not be here this afternoon; I quite understand his reasons. However, it is clear that his deputy had nothing in particular to say.
	I asked Mr. Poynter to look into the facts and circumstances surrounding the loss of the data. He started doing so three weeks ago and, as he says, it is far too early for him to draw conclusions. As I have said on a number of occasions, we need to find out what happened and why, and to learn the lessons. When we have the final report next year, we can get the conclusions and implement them.
	The hon. Member for Runnymede and Weybridge (Mr. Hammond) referred to paragraph 16 of Mr. Poynter's report, but if he was going to quote it, he might as well have quoted it all. Mr. Poynter makes the point that he has seen the e-mail in question but that it does not "on its own" prove that the official took the decision referred to. In other words, further investigations need to take place.
	The hon. Gentleman asked about the capability review, which was not held up but completed last week; I thought it appropriate to publish it today, alongside the interim report. The hon. Gentleman also asked a number of specific questions that are precisely the ones that I have asked Mr. Poynter to address. I suggest that we should get Mr. Poynter's report and draw our conclusions after that.

John McFall: When he appeared before the Treasury Committee, Dave Hartnett, the acting head of Revenue and Customs, left open the question whether there were systemic flaws. No doubt in the coming weeks we will question both him and the National Audit Office. The NAO is very much involved in the situation, as evidenced by its letter of 9 November to Revenue and Customs offering an apology.
	As we take the issue forward, can the Chancellor give us reassurance that on both the Gershon efficiencies and the reduction of staff numbers he will be sympathetic to Revenue and Customs, which is a young organisation that has brought two different departments with two different cultures together? Such sympathy and sensitivity from the Government is essential. Will the Chancellor give us that reassurance?

Vincent Cable: May I thank the Chancellor for his courtesy in bringing us up to date? I hope that he appreciates the damage that has been done to public confidence by this episode, compounded by the events in Coventry and the report on the Driver and Vehicle Licensing Agency about which we shall hear shortly. If data and valuable information are consistently lost, stolen or abused, the public completely lose confidence in government in general at all levels. It is difficult to see how we can be confident of the Government's proceeding with much more ambitious initiatives: not only the compulsory ID card scheme, but the DNA database and the NHS spine.
	The Chancellor exchanged comments with the Conservative spokesman on the specific issue of the distinction between systemic and procedural failure, with systemic failure being the responsibility of Ministers and procedural failure being that of officials. That is a subtle semantic distinction of which St. Thomas Aquinas would be proud, but surely the fundamental point is that good systems produce good procedures and bad systems produce bad procedures. In this episode, we have had bad systems and bad procedures.
	I welcome what the Chancellor said about the ban on the transfer of data without encryption. That is clearly the way forward. Has he secured the full agreement of the IT companies to use outside encryption specialists to enable that work to proceed? More generally, has he now agreed that it would be completely inappropriate to try, as he has been doing, to block through the courts the publication of the gateway reviews on the way in which the IT companies manage their affairs in Government Departments?
	In terms of the Chancellor's comments about the integration of the work of the Poynter study and the wider 2006 study of Government Departments, what is the significance of the work that David Varney, the former head of the HMRC, is doing on so-called transformational government? Is not the purpose of the study to break down barriers in data transfer between Government Departments? Is there not a danger that if that proceeds without proper safeguards it will merely compound the danger of the kind of error that we have already experienced?
	Finally, I want to ask two or three specific and narrow questions. The Government have been asked some parliamentary written questions, not least by my hon. Friend the Member for Falmouth and Camborne (Julia Goldsworthy), about whether there are protocols that govern data transfer within government. None of those questions has been answered, including those asked of the Chancellor's own Department. Are we to infer from that that there are no protocols? Is that what that obfuscation is designed to achieve?
	When the Government sent out their letter of apology, they sent out millions of letters containing large amounts of personal data that far exceeded what was necessary to communicate an apology to their recipients. Since, according to information from the Courts Service, it seems that 8 per cent. of all official letters go astray, have not the Government compounded the original disaster by putting out large amounts of personal data that will simply finish up in the wrong hands?

Alistair Darling: I am grateful for what my hon. Friend said in the first part of his question. In relation to the second part, that is something that Kieran Poynter might suggest. I do not know; we shall have to wait for him to reach his conclusions. My hon. Friend makes the good point that, if there are systems in place, we need to ensure that they work and that they are being operated on a daily basis. Ensuring that confidentiality is in with the bricks in any Government organisation—and, indeed, in any private sector organisation—is very important.

Edward Leigh: Well, that is what I have been informed by the Comptroller and Auditor General, and we also know from that e-mail that that was copied to the senior process owner. Although we obviously have to await the final recommendations, some things are clear, so will the Chancellor now accept that there needs to be change at the very heart of HMRC and that the privacy of taxpayers must be sacrosanct and cannot be compromised in any way because of a contract with EDS or cost-saving measures?

Alistair Darling: We do not know all those things, as I believe the hon. Gentleman well knows. The Poynter inquiry and, indeed, the parallel inquiry of Sir John Bourn on behalf of the National Audit Office, were set up precisely because we need to find the facts before drawing our conclusions. I am not sure whether the hon. Gentleman has had an opportunity to view Mr. Poynter's interim report, but it says that although the e-mail in respect of the first request in March was copied to the person responsible for the data:
	"That email on its own does not prove that the official actually took the decision in relation to the manner in which HMRC should have responded to the request".
	What the hon. Gentleman said about that was quite wrong. In addition, I was not going to labour the point, but I should draw the House's attention to the letter written by the second director at the National Audit Office to the same senior official in HMRC on 9 November, in which it is recognised that the way in which the request was communicated—let me put it this way—could have been better. An apology was given for what happened, but let us wait and establish the facts rather than rush to judgment, which the hon. Gentleman has been rather quick to do of late.

Alistair Darling: I agree with my hon. Friend that people get fed up of being asked for the same information by what they perceive to be the same organisation. Perhaps that illustrates the point raised by the hon. Member for Twickenham (Dr. Cable)—that if information is to be transferred between Departments, we need to ensure that there are sufficient safeguards so that only the person who is supposed to get the information actually receives it. That is why the review set up by the Cabinet Secretary, Sir Gus O'Donnell, is important to ensure not so much that individual Departments have the right safeguards, but that if information is transferred, it is done in an appropriate way. We need to marry up the two requirements of ensuring confidentiality while also ensuring that when it is in the public interest and the interest of individuals for information to be shared between different organisations, that can happen on a proper footing.

David Taylor: My 30 years' experience in public sector IT suggests that a prerequisite for secure, stable and successful systems is close end-user involvement at the specification, design, development, testing and implementation stages. In the light of two decades of substantial contracting-out of those processes to the private sector, does the Chancellor of the Exchequer expect that Kieran Poynter's final report might question the logic of that continuing process, and urge that the Government try to restore the knowledge and ability within their own ranks so that they can once again be an intelligent client and not be allowed to be sold some duff systems that are utterly insecure in operational practice?

Anne Main: When we had the dreadful new about the mess-up over the loss of information, we were reassured that any financial losses, if they happened at all, would be monitored, and people were urged to be vigilant. May I ask what measures have been put in place to prevent inappropriate access to children whose data were included on the lost discs, in case people use that data to make contact inappropriately?

Alistair Darling: As I said in my statement, the banks are constantly monitoring the accounts, and the vast majority of child benefits are paid through a fairly small number of banks. The banks have been able to check their records back to 18 October, when it is believed that the discs were posted, and have not found any evidence of irregular or unauthorised dealings. They will continue to do that, just as members of the public will be vigilant when they look at their bank statements. We have also been in touch with organisations representing children's interests, and I have spoken to my right hon. Friend the Secretary of State for Children, Schools and Families to see what steps are appropriate. The hon. Lady raises an important point. We must put in place the right procedures and decide in due course whether, and to what extent, it is right to give any publicity to what we are doing in that regard.

Sammy Wilson: I welcome the statement but I am not sure that the public will be reassured that their personal details are safe in Government hands, especially as there seems to be a new revelation of inept handling of data by Government Departments every week. Only last week, the Northern Ireland Assembly was informed that 7,000 vehicle owners in Northern Ireland had their details lost when data were sent unsecured through the post. Will the Chancellor assure me that the spot-checks to which he referred in his statement will relate to Government Departments under the control of devolved Administrations across the United Kingdom? In light of the weekly revelations, does he understand why people are increasingly concerned about the introduction of ID cards in the future?

Alistair Darling: I agree that it is important to put in place safeguards, not just for the United Kingdom Government but for the devolved Administrations, and Sir Gus O'Donnell's report makes specific mention of that. I do not agree with the hon. Gentleman, however, about ID cards. As I said to the acting leader of the Liberal Democrats, hon. Member for Twickenham, an increasing amount of information is held by Government Departments. In addition to that, those in the private sector, whether banks, supermarkets or organisations such as Google, have a remarkable amount of information and can build quite a detailed picture of what each and every one of us does. The point of ID cards is to ensure that that information is linked to the person who is supposed to get it. I see such a mechanism as a safeguard for me as an individual, because I can be far more confident that any information held about me, whether by the Government or the supermarket that I use, will only be released if I am happy for that to happen.

Greg Clark: The whole House will be relieved to see that the Minister for the Cabinet Office is present, as he responsible for information security. What discussions has the Chancellor had with the Minister? In particular, when did he brief him on the report that he received in February from Sir Edmund Burton, which said that there was a systemic problem affecting all Departments in relation to information security?

Ruth Kelly: With permission, I shall make a statement about measures that I am taking to improve the security of personal data in the context of the Cabinet Secretary's review of data across Government. I also wish to update the House on a particular security breach earlier this year relating to the loss of personal—but not financial—data by a private contractor of the Driving Standards Agency. I shall give the details of that incident later in my statement, but first let me explain some of the background.
	My Department and its agencies handle hundreds of millions of transactions with road users every year, ranging from the payment of vehicle excise duty to the licensing of new bus or road haulage operators. So that a good service can be provided for customers, personal information needs to be shared between systems. For example, motorists can only renew their car tax online, because the Driver and Vehicle Licensing Agency can check information with the Vehicle and Operator Services Agency and with insurers.
	As the Cabinet Secretary has made clear in his interim report on data security, the public have a right to expect that the information they provide to Government will be held securely and used appropriately. Let me therefore set out five key actions that I am taking to apply that principle and improve security of information in my Department and its agencies.
	First, recent events have highlighted the risks associated with the physical transfer of data by disc, tape or hard disc drive. Much data transmission by my Department and its agencies is already, or soon will be, by electronic transfer. For example, driving test results are sent electronically from the Driving Standards Agency to the DVLA and MOT results are recorded on computer by garages and then sent, in bulk, to the Vehicle and Operator Services Agency by secure electronic transfer.
	I can announce today that the DVLA has created a new link to provide regular information to the police by electronic transmission. After a short period of testing, the present arrangements, which involve the transfer of tapes by secure courier, will cease. I have asked my permanent secretary to work with agency chief executives to accelerate other plans for further transfer of data electronically, wherever that is reasonable and cost-effective.
	Secondly, I can tell the House that I intend to move forward with plans to merge two separate databases of registered vehicles that are currently held by the DVLA in Swansea and the Driver and Vehicle Agency in Northern Ireland. The vulnerability that that creates was illustrated by the recent loss of two discs in transit from Northern Ireland to Swansea containing the details of 7,500 vehicles and the names and addresses of their owners. We will remove that risk by merging the databases. That will also enable Northern Ireland agencies to offer a better service, such as online car tax, to their customers.
	Thirdly, my Department will participate fully in the next stage of the Cabinet Secretary's review—in particular, the arrangements in place in private sector contractors, the transfer of data on removable media and procedures for any data stored outside the United Kingdom. My permanent secretary has also agreed with each agency chief executive that any bulk transfer of data not by electronic transmission will take place only by point-to-point transfer by a secure courier.
	Fourthly, to ensure greater clarity of responsibility, my permanent secretary has today written to senior officials in my Department, including agency chief executives, drawing their attention to current guidance on the application of the Data Protection Act. That includes the main principles of the Act, information on handling personal data appropriately, and the role of the Information Commissioner.
	Fifthly, in order to increase transparency and in line with the interim findings of the Cabinet Secretary's review, I have decided that my Department and its agencies should cover information assurance issues in their annual reports. That will include a summary of any notifications about data security made to the Information Commissioner.
	These measures are particularly important in the light of auditing data security in my Department and its agencies in the context of the Cabinet Secretary's review. In the interests of greater transparency, I should like to draw the House's attention to one such breach that affects a significant number of people. In May this year, Pearson Driving Assessments Ltd, a private contractor to the Driving Standards Agency, informed the agency that a hard disc drive had gone missing from its secure facility in Iowa City, Iowa. The hard disc drive contained the records of just over 3 million candidates for the driving theory test.
	The records contained on the hard disc drive were: the name of the test applicant; their postal address; their telephone number; the test fee paid; their theory test centre; a code indicating how the test was paid for; and, where provided, an e-mail address. The hard disc drive did not contain details of any individual's bank account or credit card. It did not contain their driving licence number, nor their national insurance number. It did mot contain their date of birth, nor a copy of their signature. It did not contain the result of their test. The hard disc drive was also formatted specifically to fit Pearson configuration and as such is not readily usable or accessible by third parties. Pearson has confirmed that there is no external indication of the drive's contents.
	In the context of the Cabinet Secretary's review of data, I asked the Information Commissioner for his views on this case and, on Friday afternoon, I received advice on his view of the risks to the public. The Information Commissioner has made it clear that he is concerned about any security breach—especially where large numbers of individuals are concerned. However, he recognises that the risks are lower where the personal data do not include banking or credit card details and where security safeguards are in place to protect the data from third-party access. As a result, on the basis of the information received so far, he has indicated that this case does not appear to present a substantial risk to individuals. He has not therefore advised that notification of each individual is needed.
	Nevertheless, I apologise for any uncertainty or concern that those individuals might experience. The DSA has provided advice on the direct.gov website and has set up a dedicated advice line for candidates who took their driving theory test between September 2004 and April this year. I can also inform the House that Pearson has already removed the specific risk which led to the loss by using electronic transfer in place of hard disc drives.
	I assure the House that I take the security of personal data in my Department and its agencies extremely seriously. The measures that I am taking, and the actions already under way, aim to ensure that transactions of this nature are conducted more effectively and efficiently in future, and to provide greater assurance to the public. I will, of course, keep the House fully informed of progress. I commend the statement to the House.

Theresa Villiers: Following the catastrophic breach of confidentiality at HMRC, we have another serious failure of data security, leaving more than 3 million people at risk of identity fraud. The importance of confidentiality to the Department for Transport's agencies and contractors is particularly acute given the value of information on vehicles and drivers to car criminals and rogue drivers, so it is with great concern that we have listened to today's statement from the Secretary of State. I am grateful to her for giving advance notice of her statement.
	Turning to some of the measures that the Secretary of State is taking to improve data security in the future—merging the DVLA and the Northern Ireland Driver and Vehicle Agency database, moving to a secure courier method of transferring data, and circulating guidance on the Data Protection Act to agency chief executives and senior officials—the question we have to ask is: why are these things being done only now, after the disaster at HMRC? Surely they are basic common sense and basic good practice in line with the legislation that the Government themselves voted for? The Secretary of State has referred to the Department's circulating information to agency chief executives, but she has not referred to the contractors of the agencies which are the cause of the problem that she has identified today.
	Will the Secretary of State confirm that no vehicle details have been lost in this latest data failure? Will she confirm exactly how many people have been affected by the failure? What reassurance can she give to the 3 million young people whose personal data have been compromised? What steps should they be taking to safeguard their interests and minimise the damage caused by the incident? Will she admit that the hard disc was not encrypted, and that it was not even password-protected? Is there any indication of criminal involvement—was there any evidence of a break-in? When were Ministers first informed about the problem?
	The Secretary of State has told us that the agency in question was informed in May. Why has she come to the House only now to tell us what has happened? What has been happening in the interim few months to safeguard this data and do something about the problem? What grade of staff was responsible for the breach of the rules announced today? What requirements do the Secretary of State's Department and its agencies require of their contractors for the storage and copying of data on discs by those contractors? What is the structure of responsibility under her Department's data controller to make sure that, right across her Department, its agencies and their contractors, confidentiality rules are complied with? What steps have her Department and its agencies taken to ensure that their contractors make sure that all those with access to data are properly trained and sufficiently senior to understand the importance of complying with these critically important rules?
	Have the police been informed of the incident? Are any disciplinary measures being taken as a result of the incident? Will any sanctions be imposed under the Data Protection Act? Were appropriate rules obeyed for exporting data outside the UK, as the data went missing in Iowa? Who gets the bill for any losses arising from misuse of lost data—the taxpayer, or the victim of identity theft? Does the Secretary of State agree that this incident—as well as the HMRC disaster—is another blow to her plans for an untested "spy in the sky" national road-pricing scheme? How can the public possibly trust her Department with information on every journey made by every one of the 33 million vehicles on Britain's roads if it cannot be trusted with the data that it already has?
	As far back as February 2006, the Government admitted that they had a problem with data handling by their agencies. The then Minister for Transport announced a review aimed at producing a system that would protect the public from misuse of their information. He emphasised the following:
	"The Government take very seriously their responsibilities for protecting individuals' legitimate expectations of privacy and confidentiality."—[ Official Report, 16 February 2006; Vol. 442, c. 123WS.]
	In the review announced, the Information Commissioner expressed his serious concern about the importance of ensuring that the information overseen by the Department for Transport was protected and properly treated, yet in the past two weeks we have learned that the DVLA sent the personal details, including motor convictions, of anything up to 1,215 drivers to the wrong people, that it lost data for 7,600 Northern Ireland vehicles and drivers in the post, and that the unencrypted discs were actually posted on 20 and 21 November—after the news of the HMRC disaster was made public.
	Taken together with the catastrophe at HMRC, this is further evidence of systemic failure in the Government's handling of private data, and evidence of a basic lack of competence by this Government. Quite simply, the Government are failing in their duty to obey their own laws on data protection, and failing in their primary and fundamental duty to protect the interests of the people whom they were elected to serve.

Ruth Kelly: I was about to congratulate the hon. Lady on the way in which she has treated this matter, and while it is of course serious, we should look at the facts in this case and communicate them, as appropriate, to the public. I think that she acknowledged that in her opening remarks.
	It is of course right that there is good practice in government, and that agencies, chief executives of those agencies and the Department for Transport have on them the duty to follow that good practice, and to make sure that any transfer of data complies with those standards, as indeed should the transfer of data outsourced to contractors or, as in this case, outsourced to contractors in a country other than the United Kingdom. In this specific case, the external contractor, Pearson, was under an obligation to follow the principles laid down in the Data Protection Act. There is a "safe harbour" relationship with the United States where that may be appropriate, and these data were outsourced in that spirit.
	The hon. Lady asked whether any vehicle details were involved, and I can confirm that they were not. She asked how many people were involved. I said in my statement that just over 3 million individuals were involved. She suggested that the data were somehow sent by post—they were not. As I set out in my statement, a hard disc drive was not found in the secure location of the external contractor in Iowa City where the contractor had expected to find it—on the shelf. It has assured us that it was formatted specifically to Pearson's specific standards in a form that could not readily be accessible to a third party, and that nor was that hard disc drive labelled in such a way as to draw overt attention to its contents. I have asked that Pearson notify the police. It tells me that it did not do so originally because it did not believe that a crime had been committed. However, I think it only sensible that the police be informed in this sort of situation.
	The matter was first brought to my attention on 28 November. On 3 December, I sought comprehensive advice from the Information Commissioner as we were in the process of establishing the full facts of the case. On Friday afternoon, the Information Commissioner gave us the benefit of his advice, which was that he did not think in this case that the risks to the public were substantial, or that any of the individuals concerned needed to be notified directly. However, it was also said that it was appropriate to make available an advice line and use of a website that people could access. Issues to do with the Pearson contract are, of course, being reviewed by my Department, and if any appropriate action is required, it will be taken.
	The right thing to do in such situations is to look at the facts in perspective. We should consider the risk to the public and whether appropriate measures have been taken by Ministers, when they are involved, to ensure that such a situation does not happen again. The Information Commissioner's initial view is first, that the risk to the public is not substantial and secondly, that appropriate security measures have been taken. I intend to ensure that the agencies and the Department learn the lessons, and I have identified key actions to be taken that I think will further protect the public in the months to come.

Gwyneth Dunwoody: How many systems in the agencies are not capable of communicating with the Department's own system because they are different? How many of those are being pushed into the shared services system, which is obviously taking some years to bring into operation and does not seem to be working? Finally, given that my right hon. Friend is directly responsible for providing a secure driving agency that is capable of transmitting documents safely from one area to another, why is she not suggesting not only to her Department, but to other Whitehall Departments, that they use their own services, which they know work, rather than hand services over to incompetent people whose services they do not think will work?

Susan Kramer: I thank the Secretary of State for giving me half an hour's advance sight of her statement.
	The DVLA has form on mishandling data. In June 2006, it was caught selling data to private companies without adequate scrutiny, and in December this year, not only were confidential details sent to the wrong car owners as part of a survey, but the addresses, names and car particulars of nearly 8,000 owners from Northern Ireland were lost in the post on two uncoded discs.
	We now hear the mind-bending news that the records of 3 million candidates for the driving test are missing on a hard drive from what is interestingly called a "secure facility" belonging to a company in Iowa. If that happened last May, why was the Secretary of State—never mind this House—not informed? Is it not outrageous that the victims have not been informed? I challenge the idea that this is not substantial—an e-mail address was included among the information. One can only imagine the e-mails to people saying, "Excuse me, but your payment for your driving test did not clear, so could you please resend the details?" Will the Secretary of State confirm that the information was sufficient for fraudsters to use to create false identities? Does she know, or has anyone checked, whether any of the data have been used fraudulently? What information has been passed to the people involved so that they can put in place some kind of protection?
	The Secretary of State said that the information was outsourced in the spirit that it should be taken care of, but surely much more than that is involved. The message is clear: the culture must change. She has been saying that electronic data transfer will provide adequate protection, but even the Pentagon has been hacked, so surely that would just change the method by which data are either lost or stolen. Does she not agree that the Government should be minimising data holding and that rapid destruction of data should become part of their culture?
	While she is at it, will the Secretary of State be kind enough to tell me when she will answer the questions on data handling that I asked her Department on 27 November? Perhaps those questions were the reason why she got the information about Pearson on 28 November. Because I have received no answer, I would be interested to know what other information has gone missing that would be exposed by those questions.
	The magnitude of the loss that the Secretary of State announced will not be obscured by the measures that she mentioned, worthy though they might be, or those that the Chancellor announced a few moments ago. If my bank behaved like this, I would change it. Is not that an important message for the Government?

Ruth Kelly: I draw the hon. Lady's attention, yet again, to the facts of the case. She talked about her bank, but there were no bank details involved in this instance. The data lost were the names of individuals, their addresses, their telephone numbers and, where provided, their e-mail addresses. I take every instance of data loss seriously, which is why I asked the Information Commissioner to review the entirety of this case, how it had been handled, what security measures had been put in place and to assess the risk to the public. He made it clear that he did not think that the facts as he knew them meant that the loss represented a substantial risk to a significant number of people. I apologise to those who have concerns as a result of the loss, which is why I thought it also appropriate that the Driving Standards Agency develop an advice line, to which people can turn if they are worried about the data loss and, indeed, to ensure that direct.gov.uk, the website, had information for those people.
	The important point is whether we have put the matter right and whether we are learning the right lessons for handling data both in the Department for Transport and its agencies, and across Government, so that we can share information appropriately and ensure that it is adequately protected. The hon. Lady suggests that we should minimise the handling of personal information and not have large databases of personal information, but if people are asked whether they want to sort out their MOT or their tax affairs online, they probably would do so. Data handling is becoming more complex by the year, and indeed by the month. The important point is achieving the correct balance between the need for personal privacy and the desire and expectation on the part of the public that we provide a top-quality service.
	The hon. Lady also mentioned specific cases that have come to attention in the last couple of weeks. It is true that there was an incident concerning the DVLA and the details of just over 1,000 individuals, which was due to a manual error. Procedures have been put in place that will minimise the risk of that occurring again. It is also the case that the Northern Ireland Driver and Vehicle Agency sent information by post that was subsequently mislaid by Parcelforce. I have asked my officials to examine whether plans to merge the two databases in Northern Ireland and Swansea could be accelerated in the light of the recent incident. The important point is that Ministers and the Government learn the lessons and ensure that people are appropriately protected in future.

Gregory Campbell: In both the Iowa and Northern Ireland cases, what assurance can the Secretary of State give that there was not sufficient data on the discs that went missing to allow fraudsters to compile a useful database which they could use to cold-call many thousands of people for scams such as car insurance and the like?

Ruth Kelly: I can only reiterate the facts of what went missing on the hard disc drive in Iowa City. The hard disc drive did not contain the details of any individual's bank account or credit card, nor their driving licence number or national insurance number; it did not contain their date of birth or their signature. All such information would be relevant to creating fraudulent identities. Specifically, the financial data were backed up separately from the personal data, and the Information Commissioner looked at that. He has concluded that there was not substantial loss to a significant number of individuals, and that is an important and relevant conclusion.
	The Information Commissioner has also asked about the Northern Ireland case. The case of the Driver and Vehicle Agency in Northern Ireland is slightly different. It involved the details of 7,685 vehicles registered in Northern Ireland and the data consisted of the registered keeper's name and address and vehicle data details, such as the registration mark, chassis number, make, model and colour. However, there were no financial details on the discs and the Driver and Vehicle Agency has written to all the individuals affected and established an advice line. It has flagged the computer records of all those involved to alert staff in the event of any attempt to misuse the data.

Philip Hollobone: Learner drivers in Kettering will be amazed to find that some of their personal details will have been on a hard disc drive in Iowa. How many other agencies engaged by her Department hold supposedly secure and personal information on hard disc drives in other countries?

Michael Weir: Given that the lapse was on the part of a private contractor, Pearson, given that the Secretary of State's Department allows data out to other private contractors—most notably those who run private car parks who want to identify and pursue people who have parked for too long at, say, a supermarket—and given the many problems now being experienced with Government data, is it not time to review the whole process of allowing Government data outside a Department so that we keep Government data within government and not use it for outside financial reasons?

Ruth Kelly: The hon. Gentleman makes an interesting point. Certainly, where we can take measures to minimise the risk of data loss—such as accelerating the electronic transfer of data, or merging databases where possible, and making sure that secure couriers are used for point-to-point transfer of bulk data—we should do so. However, in the light of these events, we should also think in each and every case whether it is appropriate to send data to a third party. Processing data on behalf of a third party may be a more appropriate response to the handling of individual data.

Paul Flynn: For more than 50 years I have been turning up at post offices, with a handful of documents, and undertaking the tedious chore of getting a new tax disc for the car. For the first time this year I registered online. It was all over in about two or three minutes. Although this lapse is lamentable, should we not thank the authorities and congratulate them on providing a splendid high-tech service for acquiring tax discs?

Bob Spink: On a point of order, Madam Deputy Speaker. Have you had chance to see the written statement—No. 22 on today's Order Paper—by the Secretary of State for Transport on the Dartford crossing charging scheme's accounts? Given that the Bill that set up the crossing scheme stated that the charges would be entirely removed when the scheme had paid for itself, which has now happened, would it not have been better to have had an oral statement in the House so that hon. Members could have questioned the continuing, improper and hard-to-afford charges that our constituents have to pay?

Secretary David Miliband, supported by the Prime Minister, Mr. Chancellor of the Exchequer, Mr. Secretary Straw, Secretary Jacqui Smith, Secretary Des Browne, Secretary Alan Johnson, Mr. Secretary Alexander, Mr. Secretary Hutton and Mr. Jim Murphy, presented a Bill to make provision in connection with the Treaty of Lisbon Amending the Treaty on European Union and the Treaty Establishing the European Community, signed at Lisbon on 13th December 2007: And the same was read the First time; and ordered to be read a Second time tomorrow, and to be printed. Explanatory notes to be printed. [Bill 48].

Julia Goldsworthy, supported by Mr. Douglas Carswell and Mr. David Chaytor, presented a Bill to establish a Citizens' Convention to facilitate the involvement of people from all sections of society in considering the way in which the United Kingdom is governed; to make provision relating to the implementation of recommendations made by the Convention; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 25 April, and to be printed. [Bill 49].

Jane Kennedy: I beg to move, That the Bill be now read a Second time.
	This short Bill has two purposes. First, it allows us to deliver the package of personal tax reforms announced in this year's Budget. By allowing the upper earnings limit to be aligned with the point at which higher rate tax starts to be paid, the Bill makes it possible to simplify the UK's tax and national insurance system significantly. From April 2009, there will be just two main rates of income tax. They will apply to the same bands of income as the two rates of national insurance contributions, thus creating one of the simplest personal tax structures of any developed country. Income tax will be just 20 per cent. for those earning less than £43,155 a year.
	Secondly, the proposals in the Bill are central to the Government's commitment to provide a solid and simpler state pension. By bringing forward the introduction of the upper accruals point, the Bill returns the timetable for the removal of the earnings-related state second pension to that recommended by the Pensions Commission. That will mean that by about 2030, the very complex earnings-related structure of the state second pension will be withdrawn, leaving behind a flat rate scheme that will be simple to administer and simple to understand by both contributors and pensioners. I should like to explain each of those purposes in a little more detail, starting with the changes to the upper earnings limit.
	As the House will know, the changes are part of a package of reforms to the personal tax system announced in this year's Budget by my right hon. Friend the Prime Minister. That package is not for debate today, as the majority of the changes will be legislated for in next year's Finance Bill, to which I look forward, albeit with some trepidation. The reforms will take 600,000 pensioners out of income tax altogether, and will help to lift 200,000 children out of poverty. A central part of the package is the alignment of the national insurance upper earnings limit—that is, the point at which national insurance contributions become payable at 1 per cent., rather than 11 per cent.—with the level at which higher rate income tax becomes payable. The same will happen to the upper profits limit, which is the equivalent point for the self-employed—the point at which national insurance contributions become payable at 1 per cent., rather than 8 per cent.
	Moving both those limits will be a two-stage process. In the 2008-09 tax year, the upper earnings limit will be increased to £770 a week. In 2009-10, it will increase again, to align with the level at which higher rate income tax becomes payable. The second stage of that increase requires a change to primary legislation, and that change will be made by the Bill. At present, the maximum upper earnings limit is restricted to seven and a half times the primary threshold—the point at which national insurance contributions start to be paid. To align the two systems from 2009-10, that restriction needs to be removed, and the Bill makes that possible. It means that by 2009, the two main rates of income tax will apply to the same bands of income as the two rates of national insurance contributions, creating one of the simplest personal tax structures of any developed country.
	The House will want to know that there will be effective parliamentary scrutiny of the upper earnings limit once the restriction on it being more than seven and a half times the primary threshold is removed. I am pleased to be able to tell the House that the annual regulations setting the upper earnings limit will be subject to the affirmative procedure, so Members of both Houses will have the chance to debate any increase.
	I should like to deal straightaway with the claims that the increase to the upper earnings limit represents a stealth tax rise. As we have made clear, the measure should not be seen in isolation, but as part of a package of reforms that will leave four out of five households better or no worse off, and that will take 600,000 pensioners out of income tax and 200,000 children out of poverty.
	I now turn to the Bill's second purpose.

Jane Kennedy: There will be some losers as a result of the personal tax package, but the overall net effect of the changes to the Exchequer will be a cost of about £2.2 billion, so the idea that there will be a greater tax take overall simply does not stand up to real, detailed scrutiny. I may not have the answers to technical questions such as that at my fingertips. I give way to the hon. Member for North-East Hertfordshire (Mr. Heald).

Jane Kennedy: We do not have any plans to make that change, but we can of course debate the point. Income tax and national insurance contributions serve two separate purposes. We base our assessment of an individual's entitlement to benefits on national insurance contributions. If we were to merge the two, we would have to reinvent systems for making that assessment, and I would have to be persuaded that it would be a benefit all round, and that it would not create further complexity of the sort that we are trying to remove.
	I return to matter of the state second pension and the Bill's second purpose. At the time of the pre-Budget report in October, my right hon. Friend the Chancellor announced that the introduction of the upper accruals point would be brought forward to 6 April 2009. The upper accruals point is a new threshold for the calculation of both state second pension and contracted-out rebates. It replaces the upper earnings limit in both the state second pension and rebate calculations, and it was planned for introduction from 6 April 2012 at the earliest. That was legislated for in the Pensions Act 2007.
	However, the upper accruals point needs to be introduced earlier in order to ensure that the state second pension reforms can be introduced as intended, with a flat rate state second pension from around 2030. This is the result of the above-inflation increases in the upper earnings limit that we have just been discussing, which would otherwise have a knock-on effect and would have delayed the timetable for delivery of a flat rate state second pension, because the upper accruals point would have been at a higher point in 2012 than was originally expected.
	The above-inflation increase in the upper earnings limit would also have meant higher earners potentially making anomalous gains in their pensions, over and above the White Paper pension reforms because the state second pension accrues on the portion of earnings between the lower and upper earnings limit, a band that will become wider.

Jane Kennedy: It is true that we are bringing forward the state second pension upper accruals point, which raises £0.3 billion from higher rate taxpayer contracted-out rebates. However, by raising the personal allowances for pensioners by £1,180, we are taking the allowances by 2011 to around £9,770 for anyone over 65, and with a further increase, to £10,000 for anyone over 75. That costs the Exchequer £0.9 billion. That is why I say that I do not recognise the description offered by either hon. Gentlemen.
	The increases which I have described as the anomalous gains in their pensions that higher earners might make were not the intention of the personal tax package that was debated at length in this place and the other place earlier this year, and they would have been counter to our objectives of concentrating resources on providing a more generous flat rate state pension for all.
	A further effect would have been a larger than expected increase in the band of earnings on which contracted-out rebates are paid. This is because the rebate reflects the state second pension forgone, and is again paid on earnings between the lower and upper earnings limits. Again, this was never intended to be the effect of the personal tax package.
	By introducing the upper accruals point in 2009 rather than 2012, the Bill prevents most of those anomalous gains, as I tried to explain in our exchanges, as well as returning the timetable for the removal of the earnings-related state second pension to that recommended by the Pensions Commission. The new point—the upper accruals point—will be introduced at the level of the upper earnings limit in 2008-09, which is expected, as I said, to be about £770 per week.
	From that date, the upper accruals point will replace the upper earnings limit as the threshold for the calculation of both state second pension and contracted-out rebates. It is proposed that it will be frozen in cash terms at its introductory level, so that the band of earnings on which the current earnings-related state second pension and contracted-out rebates are based will reduce year on year.

John Redwood: I am grateful to the Minister, again. Can she remind the House how much worse off somebody will be when they get to their state second pension if they are earning a sum above the current upper earnings limit? They will lose their earnings-related element and go over to the flat rate, as I understand the scheme.

Jane Kennedy: There is a range of factors that will affect people at that point. If the right hon. Gentleman will allow me, I shall seek to get the detail that he asked for during the debate.

Rob Marris: My right hon. Friend is being extremely patient. Is not the political import of the total package that the Government propose a certain rebalancing, so that the prosperous in our society may pay a little more and the less prosperous may obtain a little more? If that be the case, does she share my surprise at some of the comments from both main Opposition parties about trousering an extra £2 billion, when both parties, on paper, are in favour of lessening the inequalities in our society—as the Government rightly are, as well?

Jane Kennedy: We will be able to discuss the detail in Committee. Members from Opposition parties, and perhaps some on my own Benches, will want to probe a number of points in detail. Although we are simplifying things in carrying out this change, there are complexities around it and interplaying factors in respect of how individuals are affected— [Interruption.] I am trying to say that I accept that there are criticisms of the package that we have put forward. However, when it is taken in the round and in the context of the reforms that we have introduced over a long period, few will be absolute losers as a result of the overall package.
	The changes will mean that from 6 April 2009, all employers will have to calculate, record and report additional information for employees with earnings above the upper accruals point. Although that will require changes to their payroll records, the information is essential for state second pension purposes and the calculation of contracted-out rebates. As we have just discussed, there has been some speculation about potential losses in state second pension entitlement and rebates. Although the proposals to introduce the upper accruals point in 2009 will affect some high earners, state second pension accruals and rebates for that group are still expected to be higher than those envisaged in the pension White Paper.
	In conclusion, the Bill is important and necessary. It allows us to implement a personal tax package that reduces child poverty, in which I am particularly interested. I am proud of that. It also takes pensioners out of income tax and creates one of the simplest personal tax structures of any developed country. Furthermore, it allows us to return to the timetable for the introduction of a simple flat rate state second pension scheme. I commend it to the House.

David Gauke: It is a pleasure to speak on this Bill, although it will not catch the headlines as some do. Today there have been three oral statements and 24 written statements—we are getting close to the recess, and it seems to be Government "put out the trash" time. The Bill may not even lead the debates on specifically Treasury issues; we have had the Poynter review, the security breach in Coventry and the row between the Treasury and the Bank of England on Northern Rock.
	However, we are debating the last legislative business before the end of the year—and I am delighted that we are. Although the Bill has been described as essentially technical, we can see from its contents and the story of how we got here a number of the attributes of the Government, and they go a long way in explaining some of the difficulties that the Government face.
	The first difficulty is that the Bill is, for all its technicalities, about a tax increase—two of them, in fact. As we have heard, the first increase relates to the national insurance contribution changes announced in the 2007 Budget. Hon. Members will recall it well: the then Chancellor announced with a flourish the 2p cut in income tax, and perhaps he achieved a tactical success. However, it soon emerged that he had made a strategic error, as the Budget became known as being about a tax con, not a tax cut. The national insurance change was part of that package of measures. As we listened to the then Chancellor on 21 March 2007, it was not clear what was being announced. He announced an increase in the level at which the top rate of income tax would be payable, increasing it from £38,000 to £43,000. However, he then said:
	"I will align the income tax system with the national insurance system, with its ceiling set at the same threshold of £43,000".—[ Official Report, 21 March 2007; Vol. 458, c. 826.]
	I do not know whether it was clear to other Members—it was not entirely clear to me—but he had just announced a tax increase of £1.5 billion a year.
	The argument for the alignment is that it promotes simplicity, and it is good to argue for simplicity; the Conservatives have been doing so for some time. We approve of simplicity. However, by aligning national insurance with income tax in that way, the Government have essentially imposed yet another stealth tax. The Chancellor has argued for simplicity in the reform of capital gains tax, although he does not do so as much these days. When the Government talk about simplifying the tax system, taxpayers need to start checking the spoons.
	The second tax rise is the reform of S2P, or the state second pension. I shall return to the details a little later, but as my hon. Friend the Member for North-East Hertfordshire (Mr. Heald) pointed out, contributions that were once made towards earnings-related benefits now contribute towards nothing—they are just contributions to the Exchequer. The Exchequer will raise an additional £500,000 a year on rebates to opted-out schemes. Earlier, I quoted from the HMRC impact assessment. It said that 2.1 million people with income above the upper earnings limit are contracted out of S2P and that:
	"These individuals will either see a reduction in their take-home pay as they will get a lower rebate on their national insurance contributions than would otherwise have been the case or a reduction of the money that goes into their pension scheme".

Angela Eagle: Do I take it from what the hon. Gentleman has said that the consensus on pension reform is now broken and that the Tory Front Bench position no longer supports having a flat payment for the second state pension by 2030?

Rob Marris: I am grateful to the hon. Gentleman for showing his usual generosity and politeness. Is the Conservative party in favour of the redistribution of wealth to address some of the inequalities in our society, or is it not?

David Gauke: We believe in addressing poverty.
	Let me address the issue that we face. The distinction between the two elements and the breaking up of the package are a consequence, it would appear, of an enormous oversight that goes back to the Government's changes to national insurance contributions that were announced in the March Budget. The Government's position is that as a consequence it is necessary to change S2P as proposed in the Bill in order to address the matters mentioned by the Financial Secretary.
	That prompts the question why the proposals were not identified in March 2007. The Pensions Policy Institute identified the issue in its briefing published shortly afterwards, as well as the concern that the approach appeared to be inconsistent with what the Government were attempting to do. My hon. Friend the shadow Chief Secretary to the Treasury raised the matter some months ago, long before October, in a number of parliamentary questions.
	The apparent oversight and the fact that the Treasury did not spot the problem is striking because of the fact that when the revenue impact of the Budget announcements was calculated, which the Treasury would have had to do as part of the process of producing the Red Book, it presumably should have taken into account the additional liability for additional earnings-related benefits and, in particular, the additional rebates for those who have opted out. I assume that that was done.
	If I am wrong, I hope that Ministers will correct me in the course of the debate. If it was not done, the figures in the Red Book are clearly inaccurate. We have had no indication from the Government that that is the case, so I assume that the figures in the Red Book are accurate, and that they took into account the fact that additional rebates would have to be paid over the years ahead. However, once it was spotted somewhere in the Treasury that that was an issue, it would appear that nothing was done about it.
	Why was no announcement made in March? As is so often the case with the Government, we are left to ask whether there was some kind of concealment or whether the problem was incompetence. I do not take the cynical view—certainly not in this case. However, some hold the view that the then Chancellor was on the brink of becoming Prime Minister and did not want any further tax increases, particularly in pensions, where his reputation was perhaps not all that it might have been; he therefore glossed over the issue and left it for his successor. I do not hold that view. I think that the problem was just not spotted. Perhaps Ministers could confirm that it was not spotted.
	I particularly believe that the problem was not spotted because of the suspicion that there was a breakdown of communication between the Treasury and the Department for Work and Pensions at the time. Even at the best of times, the then Chancellor—now Prime Minister—has not been renowned for his openness with other Departments. He is not necessarily the easiest person to work with. After all, the then Secretary of State for Work and Pensions, who is now the Secretary of State for Business, Enterprise and Regulatory Reform, was the Cabinet member who was widely believed to have said that the then Chancellor would make an "awful Prime Minister"—I spare the House the other adjective used.

David Gauke: May I finish my point? The Government argue—I suspect that this might be the point that the Exchequer Secretary was about to make—that flat-rating was part of the package under the pensions legislation. Absolutely. However, it was part of a package. It is being brought in now when we may not see the rest of the package until 2012 at the earliest, and possibly 2015. We have to remember that that will all be dependent on the economic condition at the time and on whether the fiscal circumstances will allow it. It is a long way off, and I am certainly not going to make any predictions about the economic conditions, but it is perfectly possible that in 2009 the flat-rating proposals will come in and that the upper earnings limit and upper accruals limit link will be broken while the rest of the package is delayed for six years, or even more.

David Gauke: We support the principle of flat-rating as part of a package. The Government broke up that package because of the incompetence of introducing a measure in March 2007 when they had not worked out the pensions contributions. The Government got themselves into this mess. The only way in which they can resolve it is by unfairly levying national insurance contributions on earners who will not receive any benefits as a consequence. Earnings-related contributions will not receive earnings-related dividends. The Government are imposing that unfairness on 2.1 million people because they failed to understand what they were doing in March 2007. They may say that it was always the original intention to make this move, but it was as part of a package; and now we have to take the Government on trust that they will actually deliver on these measures, because, rather than doing everything all at once, the Government have got themselves in a muddle.
	If economic conditions do not permit the implementation of the Pensions Act, will these provisions be reversed? There would be a logic to that. The Ministers say that this is all part of a package being implemented over a period of time, but I doubt that that will happen. That is a good reason for being sceptical about the proposals, and for not giving them our support.

David Gauke: We would look carefully at such a proposal, but we have other concerns with the Bill. We shall certainly want to examine a number of amendments in Committee. The hon. Gentleman has raised an interesting point, and perhaps we shall have an opportunity to examine the full implications of it if he serves on the Committee. From my previous experience of serving with him, I very much hope that he will.
	A further attribute of the Bill is that it demonstrates that the role of Parliament is not being taken quite as seriously as it might be. For all the talk about strengthening Parliament's position that we heard from the new Prime Minister when he first arrived in his new post, we have seen little action to support it. The Bill will weaken Parliament's position. At present, the upper earnings limit must be no more than seven and a half times the level of the primary threshold. Clause 1 abolishes that ratio and provides for the upper earnings limit for 2009-10 and beyond to be set by means of secondary legislation. The Financial Secretary said that that would be done by the affirmative resolution procedure, but we could nevertheless be faced with a situation in which potentially substantial tax increases could be achieved by Committee. For example, what would stop a Government substantially increasing the upper earnings limit by secondary legislation? It might interest the hon. Member for Wolverhampton, South-West (Rob Marris) to learn that, as far as I can see, they could increase the higher rate band of income tax—if we take income tax and national insurance together—by 11 per cent. through secondary legislation. That is not something that the Conservatives would welcome.
	Although the Bill proposes to abolish the ratio, we would certainly want to examine in Committee whether there was any good reason why a new ratio could not be inserted, and why the Government should have the freedom that they are proposing for themselves to enable any changes to the upper earnings limit to be performed by secondary legislation. That seems to represent a weakening of Parliament at a time when the Government are professing to be in favour of strengthening it.
	Here we have a Bill that will increase taxes, and do so stealthily. This story demonstrates incompetence and a failure of internal communications. It demonstrates that those saving for pensions will not be rewarded, and it weakens Parliament. Given that it is nearly Christmas, perhaps I may summarise the Bill as follows, as we hear the same old things: more stalling words, a squeeze on pensions, tax double charge and a partial cut in S2P.  [ Laughter. ] Well, it is Christmas, and if I can put a smile on the face of both the Ministers, I think I have achieved something this afternoon. However, we will oppose the Bill, because it is flawed, it will introduce yet another stealth tax, and it does nothing for the long-term good of Britain's pensions.

Paul Rowen: The hon. Gentleman will obviously support some of our tax proposals, and I look forward to seeing him do so in due course.
	The Bill will raise £1.5 billion, which is not an insignificant sum. When taken in conjunction with the tax proposals in next year's Finance Bill, this will mean that some people will get a maximum gain of £325 a year, and that there will be a maximum loss of £223. We are not talking about huge sums of money, but, as the Financial Secretary said, that money will go towards increasing the amount of disregard for pensioners and taking more children out of poverty. My view, however, is that the Government are not going to meet their target for eliminating child poverty. The proposals so far have been put forward in a piecemeal way. Whether we are talking about this Bill or the Child Maintenance and Other Payments Bill, it means hundreds of thousands of children being taken out of poverty, yet there are more than 2 million affected by child poverty, which the Government should be tackling if they want to meet their target of halving child poverty by 2010. Notwithstanding that difficulty, we accept the point of the first part of the Bill, which we believe is sensible in setting out what it is trying to do, transparent and produces a clear link. As the previous Chancellor said, it provides two thresholds and two points of payment, which is acceptable.
	We have more problems with the second part of the Bill, particularly the proposals to introduce the upper accruals point. We do not say—and nor am I about to say—that we wholly disagree with consensus on pensions. We believe that it is very important, especially for longer-term issues, to achieve a broad consensus about the direction of pensions policy. People need certainty; they need to be able to plan. We accept the principle of having the state second pension as a flat rate pension and we understand why the Government are making the change to introduce the upper accruals point at this point—in order to keep that alignment. That change nevertheless raises £290 million extra a year rising to £450 million a year—an extra tax take. Earlier, I asked the Financial Secretary what that money would be used for, because my understanding from reading the papers was that the proposals were broadly cost neutral when taken together.
	We are disappointed with the proposed change because, although we are moving forward the date for the introduction of the upper accruals point, we are doing nothing to tackle pensioner poverty. The difference between the Liberal Democrats and Labour has been the Labour Government's insistence on using pension credit as a means of tackling pensioner poverty. If we compare child tax credit with pension credit, we find that the former is claimed almost universally by those who are eligible for it. It is a flat rate payment; it is not means-tested. We have had a long-standing aim—we want it to be met earlier than the Government do—initially to restore the link between earnings and pensions and secondly to introduce a citizen's pension. We believe that the Government are taking far too long to achieve that and that far too many existing pensioners are in poverty. We would have liked the additional sums of between £290 million and £450 million to be used precisely to achieve that. In 1950, the pension was worth 18.4 per cent. of the average wage. Today, the pension is worth only 15.9 per cent., which means that today's pensioners who rely solely on the state pension—and we should recall that up to 40 per cent. of those entitled to pension credit do not claim it—are worse off.

Paul Rowen: I totally agree. As I explained, although the Government are committed to that proposal, our difficulty is that it will not happen until 2012 at the earliest and it could be as late as 2015. While the Government are moving the upper earnings accrual point to keep the second state pension in tune, we would rather that the sums raised were used to begin to restore the value of the second state pension.

John Redwood: Why does the hon. Gentleman think that someone on £40,000 a year is so rich that they can afford to pay all this extra tax? Does he not understand that, in view of the current cost of housing and inflation, they are under a lot of pressure?

Angela Eagle: The hon. Gentleman has been saying that pensioner poverty is worse and that pensioners are worse off then they used to be, but will he admit that the Government have spent £11 billion a year more in real terms than in 1997 with the greatest help focused on the poorest pensioners? In fact, millions of pensioners have been lifted out of poverty by the huge amounts of extra money that the Government have spent on them.

Steve Webb: In her intervention, the Exchequer Secretary quoted the figure of £11 billion, but as we all know, economies and numbers of pensioners grow. Will my hon. Friend ask her to confirm that the share of national income going to each pensioner in Great Britain has fallen under Labour?

Rob Marris: The hon. Gentleman will be aware that in the past 10 years, the average pensioner's income—I appreciate that he is focusing on one end of the scale—has increased by 37 per cent. in real terms, whereas the average wage earner's income has increased by 18 per cent. in real terms. In relation to the pension as a proportion of the average national wage—I think he referred to a figure of 18 per cent. in 1950 and 15.9 per cent. now—will he say what the percentage is if one includes pension credit and the winter fuel allowance? That would be a more accurate comparison.

Oliver Heald: May I start in a Christmassy and benevolent way by paying tribute to the civil servants in the National Insurance Contributions Office who do such scrupulous and careful work maintaining complex records, especially those involved in the difficult work concerning pensions? The work concerning the winding-up of pension schemes needs to be particularly carefully dealt with.
	When we consider pensioner poverty, it is important, as the hon. Member for Rochdale (Paul Rowen) said, to look at the reality on the ground. As he mentioned, a lot of people entitled to pension credit do not claim it. When pension credit was introduced, Members in all parts of the House were concerned about that issue. Take-up has never been satisfactorily dealt with, and that issue should be continually raised. The Government have signally failed to tackle an important issue for some of our poorest pensioners.
	The Bill is part of the story of broken promises that is the history of the state second pension. Anyone who bought into the vision of Barbara Castle and contracted into the state earnings-related pension scheme would feel that they had been cheated over the years. They have seen reduction after reduction in their legitimate expectations of benefits: the loss of half the widow's benefit; the loss of the 20 best years rule; and now the fact that, above a certain level of income, they will pay national insurance contributions and get absolutely nothing for it.
	I would be the first to agree that it was possible to form a consensus a couple of years ago about the way forward with pensions. There was the idea of having a more solid block of flat rate state pension at the bottom, better inducements to individuals to save, and some sort of personal account, which is undoubtedly needed to encourage low and medium earners to save. Far too many people—7 million or so—do not save enough for the sort of pension that they want in retirement.
	We would all accept that there is a case for a simpler system that is more robust and has trust in it. That is why the Bill is a disappointment. Those in the pensions world are beginning to use terms such as "sleight of hand" and "conjuring" to describe the way in which the Government behave. The sort of dressed-up proposal in the Bill, which is really about trousering money for the Treasury, is not the way forward, and does not respect the agreement reached in all parts of the House.

Jane Kennedy: Before the hon. Gentleman moves too far away from the question of SERPS and represents history in a format that I do not recognise at all, may I tell him that my father was a blue-collar engineer for many years and still regards his investment in SERPS in the early '70s and throughout his working life as one of the best that he made in his entire life? He would be the first to take issue with the hon. Gentleman, as he regards the mis-selling to people to come out of that scheme in the '80s and '90s as one of the worst pieces of financial advice that people of his generation ever received.

Oliver Heald: Of course, we can trade histories. All that I would say to the right hon. Lady is that the original SERPS was presented as the way forward, and I agree that many people benefited from it, but she must accept, as it is what her Bill is saying, that it has ultimately proved unaffordable, and that promises have consistently been broken to individuals who put their trust in the scheme. I think that Barbara Castle would have had to be dragged kicking and screaming to the House to make the proposal that the Government are now making, because she believed in her scheme and her vision. I did not support it at the time, because I felt that it was unaffordable, but it is right to note that the Bill is an admission by the Government that the Barbara Castle scheme was unaffordable and not the way forward. It is typical of the Government that, having formed a consensus with other parties in the House, they should want to attempt this sleight of hand to trouser the money as I have described, and to put forward a Bill that is about something for the Chancellor and nothing for the contributor.
	As the Financial Secretary has said, the Chancellor describes the Bill as part of a larger simplification and tax reduction package. Of course, they have to say that; but many will think that the package was designed to take £1.5 billion extra by 2009-10, and that the "element of conjuring" was to suggest that the package was a tax-cutting measure at all. What the Prime Minister relied on was the continuing public support for the contributory principle. As the authors of the leading text on the matter, Ogus and Barendt—the fourth edition, for the benefit of the hon. Member for Northavon (Steve Webb) who takes a great interest in the book—said recently:
	"People are prepared to subscribe more by way of contributions, which they see as offering returns in the form of personal and family security, than they would be willing to pay by taxation, which might be diverted to a wide variety of uses."
	It is also clear that the public know very little about national insurance and are not very questioning about it. Tolley's tax notes make the point that
	"Nearly a century ago, David Lloyd George stood before Parliament and introduced... the novel concept of National Insurance... as a 'temporary expedient'.... It is a curious fact that despite the size and permanence of this levy, very many people know little about it".
	Of course, the people who do know about national insurance are Chancellors of the Exchequer. It allows them to talk about a low standard rate of income tax, while conveniently forgetting the very large tranche of money taken in the form of national insurance burdens. That follows the Colbertian maxim—which I thought worth mentioning at this time of year—that plucking as much as you can from a goose without its squawking is the key principle of tax collection.
	The current Prime Minister has long had his eye on removing some extra money through the national insurance system. In the 1992 Labour manifesto it was suggested that the party should remove the upper earnings limit without allowing contributions above it to confer any additional benefit entitlement. On that occasion the public saw through it completely, which was one of the reasons why Labour lost the election so badly. The public did not want to undermine the contributory principle in that way. Ever since then, however, the Prime Minister has had on his mind taking more money from national insurance contributions. It was very noticeable that at the time of the 2001 general election, when asked to do so, Labour refused to rule out taking more money in national insurance contributions.
	Simplification of taxes is to be welcomed, but not as an excuse for a stealth tax. My right hon. Friend the Member for Wokingham (Mr. Redwood), who was present earlier, has recently revealed the increased complexity of the tax and benefits system under the current Prime Minister. Simplification is indeed welcome, but it must be acknowledged that in this instance it is being used to mask a tax rise.
	The original proposal was to introduce the new upper accrual point in 2012 at the same time as the start of the uprating of the basic state pension in line with earnings. I can tell the Financial Secretary that that was the deal. The end result of an early introduction of the upper accrual point in April 2009 is that we pay more national insurance up to the higher earnings limit, but receive none of the benefits that that should entail. As  Taxation magazine has remarked,
	"I don't know about you, but that looks like a straightforward tax increase to me."
	It is also important to consider the effect on contracted-out occupational pension schemes. It has been estimated that the amount of national insurance rebate being paid into such schemes will be reduced by about £2 billion between 2009 and 2014. The National Association of Pension Funds has observed that that could
	"increase the cost to employers offering a Defined Benefit salary-related pension."
	Given that the Government have already undermined occupational pension schemes by carrying out a £5 billion-a-year pension tax raid in ending dividend tax relief, reducing protection for members by twice cutting the minimum funding requirement, and failing to accept our proposals for a pensions lifeboat for those who have lost their pensions until today, thus putting those people through misery, is it really right that they should now be taking further measures that will cut confidence in occupational pensions by increasing the cost to employers? There is a serious question to be asked about whether the Government understand pensions at all.
	It is widely accepted that as many as 7 million people are not saving enough. Occupational pensions have been the bedrock of good pensioner provision in retirement. Nothing should be done to push employers into closing their schemes, and they should not be offered inducements to do so. The aim must be for more people to save more, and the best way of ensuring that that happens is to encourage employers to operate good work-based pension arrangements and open them to all employees.
	On another day, we shall have a chance to debate personal accounts. I hope that they will be developed with employer contributions that do not involve employers who already provide a good pension scheme. We do not want workplace schemes with good benefits to be closed, and members to move down the scale into personal accounts. There is a real risk of diversion.
	Let me end on a seasonal note. At this time of year I think it fair to say that with this Bill—taking tax through the back door and damaging occupational pension schemes—the Prime Minister has moved from being Mr. Bean to being Mr. Scrooge, and all I would say to him is "Bah, humbug!"

Charles Walker: I should be delighted if it went towards helping the hon. Gentleman's constituents. I am referring to all the additional national insurance money that we are discussing in relation to the Bill—I wish to remain within the bounds of the debate, Mr. Deputy Speaker. However, I should also be delighted if my constituents, too, could partake in the additional bounty, and we could keep one of their hospitals open.

Charles Walker: I shall crack on, Mr. Deputy Speaker. I am not quite aware of the hon. Gentleman's figures. In my constituency, spending per head is £5,800, whereas in Scotland it is £8,200. I would be happy to have that debate with him at a later date.
	The Financial Secretary said that pensioners are so much better off under this Government. If so, why are they so cheesed off in Broxbourne? Very few pensioners to whom I talk have anything good to say about the Government. Many have seen their standard of living decrease because council tax has gone up due to underfunding from the Treasury and the cost of fuel has gone up. The Government are being a little disingenuous when they say that pensioners are better off than they have ever been. I am not sure that that is the case. Do not take my word for it; go and ask the pensioners.
	With that, I wish you all a very merry Christmas and I shall see your smiling faces in January.

Justine Greening: It is a pleasure to be able to wind up the debate on behalf of the Opposition. It seems that it is another week, another emergency statement from the Treasury, but this afternoon's debate has been more about what Labour in government does best: imposing stealth taxes and hitting hard-working people across the country. In the midst of the incompetence that we see almost daily across government and truly embedded in the Treasury, there is one thing that the Government do with aplomb and vigour—tax people who do not even realise it and then, in customary Government style, dress it up as somehow doing those people a favour.
	As my hon. Friend the Member for South-West Hertfordshire (Mr. Gauke) pointed out, this measure was part of a Budget that was represented as some sort of tax cut but eventually emerged in its true form as a tax con. The Bill represents a stealth tax on savers and on those who are trying to provide for themselves in retirement. It is a stealth tax because, on the one hand, it ratchets up significantly the national insurance contribution from middle and higher earners—by £1.5 billion, a not insubstantial amount, in 2009-10 alone—by aligning the national insurance upper earnings level with the higher rate taxation level. On the other, the Bill goes further and makes sure that people paying extra NI contributions will see little, if any, of them in terms of their additional state second pension rights accrued.
	Combined with the backdrop of a weak Chancellor buffeted by events, today's date was apparently destined to be a lively one. In reality it proved less so because, unfortunately and disappointingly, not one Labour Back Bencher took the time to contribute to this debate—

Justine Greening: As the hon. Gentleman knows, our party supported the broad pension reforms brought forward by the Government, but our concern is that the Bill undermines that consensus and decouples the restoration of the earnings link from the bringing forward of the flatrating of the state second pension.
	The contributions today have been limited in number but helpful. As I said, we did not have one from a Labour Back Bencher. The Liberal Democrat spokesman, the hon. Member for Rochdale (Paul Rowen), said that he accepted the Government's alignment of the upper earnings limit and the higher rate tax threshold for paying national insurance, but had issues with the upper accruals point and concerns about pensioner poverty. He talked about introducing a citizens pension but failed to say at what level that pension would be introduced. He also did not say whether there would be any limits on who would receive the pension—

Justine Greening: This is not really a debate about pensions, but it is interesting that the hon. Gentleman did not answer my question or mention any details of a residency test for his citizens pension. As and when the Government ever get around to calling an election and going to the people to find who they want running the country, we will debate our pension proposals.

Kelvin Hopkins: I thank the hon. Lady for giving way once more. She suggested that the Liberal Democrats were not saying the level at which their citizens pension should be set. However, Liberal Democrat Members nodded vigorously in agreement when I suggested that we ought to aim for the basic state pension to be at least 25 per cent. of average earnings, the level it was at when the Conservative party broke the link with earnings. Would 25 per cent. be a good figure?

Justine Greening: The hon. Gentleman obviously thinks it is. It is interesting to see the collegiate working between the Liberal Democrats and the Labour party on this matter. Perhaps it is symptomatic of what we will see when the Liberal Democrats get their new leader.
	My hon. Friend the Member for North-East Hertfordshire (Mr. Heald) talked about broken promises and today we are seeing another, although it may be more of a moving of the goalposts, which is concerning Opposition Members. He talked about the "conjuring" that we have seen in the Bill—a very apt word. We all accept that simplification is to be welcomed, but we are concerned about the way in which the Bill delivers it. We are also concerned about the fact that although we have made progress in discussing pensions and pensions reform, that consensus has been tested today.
	My hon. Friend the Member for Broxbourne (Mr. Walker), in a customarily witty and wide-ranging speech, said that he smelled a rat but did not link that with any specific Member, which was reasonable of him. He also linked the Bill with health care in his constituency, which was some achievement.
	There is no doubt that the Bill increases the national insurance contributions that higher rate and some basic rate taxpayers will make, particularly those who are on about £40,000 to £43,000 a year. As my right hon. Friend the Member for Wokingham (Mr. Redwood) mentioned, there are particular income levels at which people will be paying more national insurance as a result of the Bill—

Justine Greening: The Minister says it is small, but Mike Warburton of Grant Thornton has said that some people may see their national insurance contributions increasing by £946 per annum on the previous tax year. Grant Thornton calculates that people on £41,000 are going to pay nearly £500 a year than in the current tax year, a 15 per cent. increase. It does matter.
	In discussing the alignment of the upper earnings limit with the higher rate tax threshold in the Budget 2007, the same Mike Warburton said that this was a stealth tax and that
	"everyone has to remember this is a finance-raising measure."
	David Heaton, of the accountants Baker Tilly, said:
	"It is quite clear that the Government is now treating national insurance as an extra bit of income tax."
	My hon. Friend the Member for North-East Hertfordshire referred to that, too. This is no minor stealth tax; it will raise £1.5 billion in additional national insurance revenue in just 2009-10. As my hon. Friend the Member for South-West Hertfordshire mentioned, the secondary legislation protection that we now have, in terms of the move to have an upper earnings limit at a level that is not set through primary legislation, causes some concern to those on the Opposition Front Bench, and we will want to get assurances on that in Committee.

Justine Greening: The hon. Lady is right to highlight the fact that the PPI spotted that this course restores the original plan to flatrate the state second pension back towards the original Pensions Act 2007 path, but in fact the PPI also identified that this was a problem back in April 2007. The question is why the Treasury did not apparently identify that—which is why it is having to bring this in by the pre-Budget report, rather than mentioning it in the original Budget.

Philip Dunne: Did I hear my hon. Friend correctly? Did she indicate that one of the clauses in the Bill will allow future increases in the upper earnings limit to be made by means of secondary legislation, which presumably means that unlike other aspects of tax change which are normally dealt with in the Finance Bill each year, in future upper earnings limits can be raised at the whim of the Government without being properly debated?

Justine Greening: Members always know they are on to a winner in this House when other Members start going back in time and when that is the only critical point they can make.
	Although Conservative Members broadly supported the pension reform and we all recognised that achieving some political consensus was important, what we are worried about is that after that consensus has been reached the goalposts are being moved. That does not give us the confidence we had at the time of the Pensions Act 2007. That point is not dissimilar to the serious point the hon. Gentleman's Front-Bench colleague raised earlier. This is a serious point, which is why it is right to challenge the Government on it.

Justine Greening: Listening to the hon. Gentleman's remarks, one would not think that the current Government had been in power for 10 years and still have not restored that link. I wish later to probe and press the Ministers here today to try to discover their latest plans in respect of re-establishing the link, and whether they are able to confirm it will be re-established. However, all we know from this Bill is that one half of this pension package—the flattening of the state second pension—is being brought forward. We have no additional comfort from the Government on the other half of it, which is crucial in providing an overall package that we are happy with: the re-establishment of the link between the state pension and earnings. My party proposed that at the last election, before the Government accepted it. That is the key part of this jigsaw on which we are concerned that Ministers are not giving us the assurances we seek. Frankly, the Prime Minister is the main roadblock to our not being able to get assurances on when that earnings link will be re-established; perhaps now that he is in his elevated position as leader of this Government, we will be able to get some more assurances, but I will wait to find out about that later in the debate.
	I have addressed the first piece of this package: the stealth tax of £1.5 billion. The second piece was the incompetence aspect of the Bill—or what we think could have been incompetence from the fact that although the desire to align the upper earnings limit with the higher rate tax threshold was announced way back in March in the Budget 2007, somehow the Treasury forgot that in having people pay so much more national insurance they also needed to consider alongside that the relevant state second pension accrual. It does not appear to me that that accrual definitely was considered by the Government, and perhaps they can confirm whether it did make an appearance in the Red Book. It certainly did not do so in the narrative aspect of the Red Book. We have seen figures in the Red Book which it could be a part of, but can the Minister confirm whether those amounts that appeared in the pre-Budget report were already accounted for in the Red Book figures we had earlier in the year?
	When asked by the then shadow Secretary of State for Work and Pensions, my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond), whether that had been discussed at the time of the Budget, the then Secretary of State gave a vague answer that a range of pension measures had been discussed between the Treasury and the Department for Work and Pensions. However, it does not appear that the particular aspect we are discussing today was one of them; otherwise, presumably it would have been part of the public finance figures of earlier in the year. Instead it was clearly identified as an issue in public only when it was raised by our Front Bench team and other experts such as the PPI.
	In its briefing, the PPI states that unless the link between the state second pension and national insurance contributions is broken before 2012
	"it will also increase the annual build-up of S2P for people earning above the old UEL of £34,840...Those earning above the new UEL of £40,625 will build up a pension of £2.83 a week in 2009 compared to £2.38 without the Budget changes."
	So way back in April the PPI had already clearly seen this problem of the lack of understanding of the consequential impact of what was brought in in the Budget 2007. If the PPI and the Opposition could see it, why could the Government not see it? Perhaps in the wind-ups tonight, we can be given a little more insight into the stage at which that was discussed in detail and whether it was before or after the Budget 2007. The sense I have is that it was after.
	Of course, this is no insubstantial consequential change of the Budget 2007; it amounts to £730 million. The bring-forward of this upper accruals limit from 2012 to 2009 which was announced in the pre-Budget report in October had just one sentence devoted to it in the entire statement made by the Chancellor. I appreciate that at the time of the pre-Budget report statement the focus of the Government's attention was on responding to what had been a highly successful series of tax proposals by the Opposition, but even in this statement the new Chancellor drew precious little attention to the consequential amendment in the second half of the Bill. As my hon. Friend the Member for South-West Hertfordshire has set out, we are waiting to hear whether that omission from the Budget 2007 announcement was simply a case of the Treasury team not understanding the impact of its own national insurance changes, or whether the then Chancellor simply did not have the guts to be honest about this change with the public.
	I realise that, as we have already touched on, the flatrating of the state second pension was part of an overall pension deal that would see the state pension once again linked to earnings—something that this party pushed the Government to do before the last election. However, they have always been reticent about confirming exactly when the earnings link would be re-established. The Turner report suggested that the date should be around 2009 or 2010, but in responding to those proposals, the Government talked about a time line of 2012 or, at any rate, of doing so before the end of the Parliament, subject to affordability.
	I remember when I was still serving on the Work and Pensions Select Committee pressing the then Secretary of State for Work and Pensions on the impact of the affordability test and whether that was the core test that had to be passed. He was very keen not to box himself into any commitments one way or another, but given the changes that we are now faced with in this Bill, can the Minister confirm on what date the earnings link with the basic state pension will be re-established, as per the pension reform deal that this House agreed?
	The PPI has estimated that the pull-forward of the second half of this provision—flatrating the state second pension earlier, to 2009—will cost the public £2 billion, so there will be a big impact. It will mainly affect employees and employers, who will not now receive the level of contracted-out rebates that they had planned to receive. That is no way to thank organisations and individuals who have made efforts better to provide for themselves, rather than relying on the state. As I said earlier, when the original commitment was made last year to re-establish the earnings link, the Government set themselves the key test of affordability. Most people can only say that since that time public finances have worsened, so can the Minister confirm when this link with earnings will be re-established? This is an issue of trust, and it is very important if we are to maintain the consensus on pensions that we achieved earlier in the year.
	Let us not forget that the cost of introducing this Bill to business will be £30 million. Such businesses—the overwhelming majority of which will be small businesses—will face that cost three years earlier than was originally planned. The Minister needs to take that on board and—particularly given the capital gains tax debacle and the increase in corporation tax for small businesses—give us a sense of what she plans to do to help businesses cope with costs that they will perhaps have to bear earlier than they were expecting.
	The impact assessment points out that this change will cost the Treasury £10.7 million. Given that this is an IT change, does that figure have built into it the inevitable disaster costs that we are so used to with this Government when they try to use IT to achieve anything? I hope so, because based on past and current—and no doubt future—performance, that money will be needed.
	This Bill perhaps sums up the Treasury as we so often see it today—stealthily taxing people, and combining that with a dash of incompetence. Small businesses hit by the capital gains tax grab will attest to this, and after today so will millions of pensioners. The former Chancellor was keen to go out with a flourish, and this Bill is rooted in the changes that he made in his final Budget earlier this year. He wanted to give the British public the impression that he was a tax-cutting Chancellor, but we all now know better. He may have celebrated his elevation to the office of Prime Minister, but his Treasury legacy will be stealth taxation and incompetence, which is a toxic tax cocktail for the British public to have to stomach. With this Government, simplification has become a byword for raising tax and the cover through which businesses and people saving for pensions are, frankly, all too often made the victims of Treasury daylight robbery. Worse, this Government have destabilised the consensus that we are hoping we achieved in reforming pensions. Put simply, it is not good enough. We are not buying it and all the signs are that the British people are not buying it, which is why we will be voting against this Bill tonight.

Angela Eagle: I want to begin by wishing all Members who have given the Chamber priority on this, the period approaching the Christmas period, a happy Christmas; I hope that they have a nice break. The compliments of the season to everyone.
	We have had an extraordinary debate today. We see that the Conservatives are going to vote against a Bill that helps to put into effect a tax cut that will benefit or not disadvantage 21 million people; that will take 600,000 pensioners out of tax completely, a point that was not even mentioned this evening; that will take 200,000 children out of poverty—child poverty did not feature much, either; in fact, I am not sure that it was even mentioned by Conservatives—and that will help to make work pay.

Angela Eagle: I was going to get on to the hon. Gentleman soon enough, but I am happy to give way to him now.

David Gauke: If the hon. Lady is talking about the context of the 2007 Budget, she will remember from when we were both members of the Treasury Select Committee the evidence given to us by the Institute for Fiscal Studies showing that 5.3 million households, most of whom were among the lower paid, lost out as a consequence of that Budget.

Angela Eagle: The IFS also said at the time of the Budget that the
	"income tax and NI package has been cleverly designed to limit the number of losers to one-household-in-five at a modest overall cost to the Exchequer".
	So there was actually much praise from the IFS for the overall balance of the package that this Bill helps to put into effect.
	The hon. Member for South-West Hertfordshire (Mr. Gauke) talked about simplicity and said that we should be wary of it. He also shied away from a direct question. I had to ask him more than once about the Opposition's attitude now to the pensions consensus that had been developed, and which was put into effect during the passage of the Pensions Act 2007. I asked him a direct question—whether the flatrating of the state second pension was still part of the consensus, and whether the Opposition had now decided that they did not wish, in opposing this Bill, to see that crucial part of the Turner commission reforms put into effect.
	In the light of the hon. Gentleman's refusal to answer that question, we have had a huge flip-flop from the Conservative party on what was meant to be a consensus. When the Pensions Bill, which referred to this exact—

Angela Eagle: My hon. Friend, whom I admire and respect, should have a close look at what the distributional effects of flatrating the second state pension are. Such an approach ensures that those paying over the upper earnings limit will not receive earnings-related extra accruals after 2030. Flatrating the state second pension is a progressive thing. It appears that the Conservative party, after being in a consensus, has decided that it does not want something as progressive as that.
	Interestingly, when the second state pension consensus, which the Bill puts into effect, was being forged, the Conservative spokesperson in Committee, the hon. Member for Eastbourne (Mr. Waterson), said that
	"abolition of the S2P and state earnings-related pension scheme rules would result in marginal reductions in second pensions for some older workers, but that is more than made up for by the earnings-uprated basic state pension." ——[Official Report, Pensions Public Bill Committee, 30 January 2007; c. 199. ]
	By that argument, he blew out of the water all today's claims about the Bill being a stealth tax, because he explained precisely the balance of the personal tax package that the Bill helps put into effect. Although the upper earnings limit increases cost money, that money is recycled and given back to people by the later changes in pensions uprating and the earnings relation.
	Yet, a few weeks later—we have seen more of this again today—the shadow Work and Pensions Secretary said that the provision was
	"a new stealth tax on retirement".
	He said that despite the fact that his party supported flatrating the state second pension when the Pensions Act 2007 was going through Parliament. The Conservatives are now voting against it, so what are we to make of the opportunism demonstrated by the position that the main Opposition party has taken today? We can conclude that the Conservatives are searching for press releases and headlines. They are giving one impression one minute and the opposite impression when they are in front of audiences. They say what they think a particular audience wants to hear, hoping that nobody will put two and two together and realise that they are saying one thing to one audience and completely the opposite to another.
	Where will that approach get the Conservatives? It will mean that few people will take seriously their pronouncements on cross-party consensus and on their approach to these policy matters. If they are in favour of flatrating the state second pension, why have they been so hostile today to the measure that implements it? If they were so against it in the first place, why did they not even bother to vote against it when it was debated during consideration of the Pensions Act 2007
	The hon. Members for South-West Hertfordshire and for Putney (Justine Greening) asked whether we knew at the time of the Budget that there was an issue about aligning the state second pension—flatrating the upper earnings limit—and about the changes that the Bill brings into effect to prevent unintended windfalls for those who earn above the higher earnings limit. We knew that that was the case, so this is not, as has been alleged, incompetence—in fact, the figures featured in the Red Book as part of the national insurance contributions calculations. We were aware of the issues involved, but we had to work up the policy options in detail to come to a workable solution in this complex area of public policy.

Angela Eagle: The arithmetic in the Red Book took account of it. We knew that there was an issue about increasing the upper earnings limit faster than had been expected. We also knew the implications that that would have for unlooked-for and unearned windfalls for higher rate taxpayers with respect to the state second pension. We were working through policy on this, but if the hon. Lady were to look, she would see that the issues are taken account of in the Budget arithmetic.
	The hon. Member for South-West Hertfordshire made no real mention of child poverty or pensioner poverty, but he was very concerned about the small number of people earning above the higher earnings limit who may make minor losses because of some of the changes to the state second pension. That again proves that the Conservative party are for the few and not for the many.
	The hon. Member for Rochdale (Paul Rowen) made an interesting speech, in which, to his credit, he talked about child poverty and his concerns about whether the target could be reached. He also made some comments about pensioner poverty, and I tried to bring those to his attention at the time. He said that he supported the Bill in theory and that he liked the first part of it but not the second. He supported the increase in the upper earnings limit, but then said that his party was going to vote against the Bill anyway—that seems an odd thing to do. He said that he had problems with the upper accruals point and the state second pension point. Again, we can talk about that, although the Liberal Democrats have a distinct policy on a citizen's pension, which he discussed and which has been consistently put forward. It involves some difficulties and issues, but it has been their policy for a long time.
	I cannot understand why the hon. Gentleman feels that the Bill needs to be voted against when he supports at least half of it. If he wished, he could have raised some of these issues in Committee. We could have debated whether his concerns could be accommodated in some way and whether we could make progress, but he has decided, despite supporting at least half the Bill, that he must vote against it.

Steve Webb: The Minister was given advance notice about an hour ago of this question and I hope that she can now answer it. Can she confirm that every pensioner in Britain is getting a smaller share of national income now than they were 10 years ago? She has had a chance to receive a note, so is that true or not?

Angela Eagle: The hon. Gentleman should realise that this is the first Government ever to cut the link between age and poverty. People over 60 are now no more likely to be in poverty than any other cohort in society. That is an achievement of which this Government can be extremely proud and the hon. Gentleman should applaud that achievement.
	It is not true that pensioner poverty has not been tackled. We have spent a great deal of money on tackling it and we have made a big difference to the poorest pensioners, who have seen the largest gains. The hon. Member for Rochdale should at least admit that we will spend £15 billion a year more by 2020 under the pension reforms. As I have said, 57 per cent. of pensioners will pay no income tax from 2008.
	The hon. Member for North-East Hertfordshire (Mr. Heald) made one of his usual contributions, which I always enjoy. He and I have been in the House a long time and spent a lot of time on Select Committees together bantering about our different views of politics and how society should be run. However, I have never known him be so cheeky as to pray in aid Barbara Castle. He also talked about SERPS—the state earnings-related pension scheme—and professed great outrage that it had been cut so often, but he failed to remind the House that the Tories introduced the largest cut in SERPS ever in the Social Security Act 1986. That was in between cutting the link with earnings and telling people, as they descended into poverty, with child poverty doubling and pensioner poverty soaring, that if it was not hurting, it was not working. I congratulate the hon. Gentleman on his sheer brass neck.
	On the Government proposals to claw back money by introducing an upper accruals point early, the flatrating of SERPS was part of Adair Turner's Pensions Commission, which recommended it, and it had cross-party consensus when it was published. There was a statement in the House and the Conservatives said that they agreed with it. The Bill will essentially achieve that, but all those who have spoken tonight have said that they are against it. What are we to believe? The hon. Gentleman mentioned increases in national insurance contributions, but the biggest increase was in 1985, when the Conservatives abolished the upper earnings limit for employers. That was done by Nigel Lawson.
	I know that Barbara Castle, who was a doughty fighter for social justice, a fantastic Labour Minister and a particular heroine of mine, would have congratulated the Government on their work in attempting to abolish pensioner poverty. She would also have noted with interest the effect of the second state pension and the pension reforms. Many people underestimate the radical nature of those reforms. The Bill is in essence a paving Bill that will ensure that the reforms to the pension system can be put in place. When they are completed they will reduce the number of years of contributions required before individuals qualify for a full pension from 44 years for men and 39 years for women to 30 years for everybody. That is a substantial and progressive change that Barbara Castle would have been proud to introduce herself. I am sure that she would have congratulated this Labour Government on doing so.
	Another aspect of the pension reforms with which the Bill will assist is the crediting in of those people caring for older people and those with disabilities, as well as children, for the first time. That is something that Barbara Castle campaigned on all her life. Indeed, she used, as a main reason for the original introduction of SERPS, the broken earnings record for many women. The changes involved in the second state pension and other pension reforms will, for the first time, ensure that women are not disadvantaged by broken earnings records. Crediting in will start in 2010, and we can look forward to the once unthinkable achievement that 90 per cent. of women, like 90 per cent. of men, will qualify for the basic state pension in their own right by 2020. Barbara Castle campaigned for that all her life and she would be extremely proud that it is to happen.
	The hon. Member for Broxbourne (Mr. Walker) smelt rats and talked about stealth taxes, as did the hon. Member for Putney. However, if they agree that there should be a balanced package as part of the pension consensus, it is unfair to try to claim that the bits that increase tax are bad while failing to mention the bits that return that income in the form of the tax changes that are part of the package. It is important to consider the package as a whole. I reject the view of many Opposition Members that the measure is part of a stealth tax. Actually, it is part of an extremely balanced package that will enable the pension reforms that I have just mentioned to be brought into effect at the same time as the changes in personal tax rates. That will lead to our having the lowest rate of income tax in 75 years and will mean that we get 200,000 children out of poverty and 600,000 pensioners out of paying tax. We must continue to pursue that aim and the Bill will enable us to do that. The hon. Member for Putney talked a lot about stealth taxes.

Andy Burnham: What does he mean?

Angela Eagle: Not only does my right hon. Friend the Chief Secretary feel insulted because he does not think that he should be left out of the phrase "the nicest Treasury Ministers", but I feel insulted because the hon. Gentleman is ruining my reputation by making out that I am nice. By trying to compliment those on the Front Bench, he has succeeded in insulting us all. Perhaps that was his original intention.
	The hon. Member for Putney was not the only one to say that the Bill would somehow remove parliamentary scrutiny of the upper earnings limit by abolishing the seven-and-a-half times limit relating to where the upper earnings limit can fall. If she had been a bit more generous, she might have admitted that the Bill will use the affirmative resolution procedure, which means that any future changes to the upper earnings limit will have to come before this House and the other place and be subject to a debate with a potential vote. I do not see that that change should give anyone cause for concern in terms of parliamentary scrutiny. The House always considers extremely carefully affirmative resolutions that come before it. I do not think that the hon. Lady should worry too much that any future increase in the upper earnings limit will somehow go through the House without anyone noticing.
	The hon. Lady talked about the potential burdens on business and she is right to say that the changes before us rely on an increase in administration. However, I have to point out to her that that will be modest even if, as with all these things, it is regrettable. The Conservative party signed up to the flatrating of the state second pension and that will require the administrative change to be made, so the only difference is that it is being made three years earlier than planned. I assure her that we have been in detailed conversations with the appropriate members of the business community to see whether we can minimise the burden.

Jim Sheridan: My hon. Friend will be aware of the importance of national insurance contributions to our public services and, in particular, to the health service. Will she perhaps expand on what would happen if the Bill was defeated tonight and on how that would impact on public services?

Angela Eagle: My hon. Friend is right. I suspect that the Opposition Members will have to explain to their constituents perhaps over the Christmas period why they went into the Lobby to vote against taking 200,000 children out of poverty and 600,000 pensioners out of tax.
	As the Bill goes into Committee, clearly a number of points will have to be debated at greater length. I am sure that my right hon. Friend the Financial Secretary will look forward to having those debates. However, let me once more remind the House what the Bill will achieve. First, it will allow us to deliver a package of changes that will create one of the simplest personal tax structures of any developed country so that the two main rates of income tax apply to the same bands of income as the two rates of national insurance contributions for the first time in our history. Secondly, the Bill returns the timetable for the introduction of a simple flat rate state second pension scheme to around 2030, as recommended by the Pensions Commission, rather than its being delayed by several years. The Bill simplifies our personal tax system and it brings forward the simplification of our second state pension system. I commend it to the House.

Motion made, and Question put forthwith, pursuant to Standing Order No. 83A(7) (Programme motions),
	That the following provisions shall apply to the National Insurance Contributions Bill:
	 Committal
	1. The Bill shall be committed to a Public Bill Committee.
	 Proceedings in Public Bill Committee.
	2. Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on 22nd January 2008.
	3. The Public Bill Committee shall have leave to sit twice on the first day on which it meets.
	 Consideration and Third Reading
	4. Proceedings on consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.
	5. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.
	6. Standing Order No. 83B (Programming committees) shall not apply to proceedings on consideration and Third Reading.
	 Other proceedings
	7. Any other proceedings on the Bill (including any proceedings on consideration of Lords Amendments or on any further messages from the Lords) may be programmed . —[Tony Cunningham.]
	 Question agreed to.

Stephen O'Brien: In rural and remote areas, post offices are often the lifeblood, and the last remaining outpost, of community life. That is certainly true in Eddisbury, where they are vital. However, we are now faced with a brutal, unnecessary and appalling process whereby the post offices in four wards in my constituency are being decimated by a Government-inspired death by a thousand cuts.
	I wish to present four petitions regarding four post offices that are threatened with closure, as is the case for Meadowbank post office, which is on the outskirts of Winsford, the main conurbation in my constituency, and three post offices in much more rural villages or hamlets: Cholmondeley, Tilston and Threapwood.
	All the petitions declare that the enormous
	community value as well as the services available
	at the respective post offices
	are vital and must be maintained.
	The petitioners of Cholmondeley, Tilston, Threapwood and Meadowbank, and their respective neighbouring districts—they are all relatively cut off from other areas where people may access services—request that the
	House of Commons urges the Government and Post Office Ltd. to retain
	the post office in each particular area
	and the full services that our post offices provide to local people and the most vulnerable groups in our communities; and further requests that the Government and Post Office Ltd. withdraw their plans and undertake an honest review to examine how, rather than destroying our Post Offices, we can secure their long term future.
	 Following is the full text of the petitions:
	 [ The Petition of residents of Cholmondeley and its neighbouring districts,
	 Declares that the community value as well as the services available at Cholmondeley Post Office are vital and must be maintained.
	 The Petitioners therefore request that the House of Commons urges the Government and Post Office Ltd. to retain Cholmondeley Post Office and the full services that our post offices provide to local people and the most vulnerable groups in our communities; and further requests that the Government and Post Office Ltd. withdraw their plans and undertake an honest review to examine how, rather than destroying our Post Offices, we can secure their  l ong term future.
	 And the Petitioners remain, etc. ]
	[P000091]
	 [The Petition of residents of Meadowbank and its neighbouring districts,
	 [ Declares that the community value as well as the services available at Meadowbank Post Office are vital and must be maintained.
	 The Petitioners therefore request that the House of Commons urges the Government and Post Office Ltd. to retain Meadowbank Post Office and the full services that our post offices provide to local people and the most vulnerable groups in our communities; and further requests that the Government and Post Office Ltd. withdraw their plans and undertake an honest review to examine how, rather than destroying our Post Offices, we can secure their  l ong term future.
	 And the Petitioners remain, etc. ]
	[P000092]
	 [The Petition of residents of Tilston and its neighbouring districts ,
	 Declares that the community value as well as the services available at Tilston Post Office are vital and must be maintained.
	 The Petitioners therefore request that the House of Commons urges the Government and Post Office Ltd. to retain Tilston Post Office and the full services that our post offices provide to local people and the most vulnerable groups in our communities; and further requests that the Government and Post Office Ltd. withdraw their plans and undertake an honest review to examine how, rather than destroying our Post Offices, we can secure their l ong term future.
	 And the Petitioners remain, etc. ]
	[P000093]
	 [The Petition of residents of Threapwood and its neighbouring districts,
	 Declares that that the community value as well as the services available at Threapwood Post Office are vital and must be maintained.
	 The Petitioners therefore request that the House of Commons urges the Government and Post Office Ltd. to retain Threapwood Post Office and the full services that our post offices provide to local people and the most vulnerable groups in our communities; and further requests that the Government and Post Office Ltd. withdraw their plans and undertake an honest review to examine how, rather than destroying our Post Offices, we can secure their  l ong term future.
	 And the Petitioners remain, etc. ]
	[P000094]

Post Office Closures (Adur and Worthing)

Tim Loughton: As promised, I will opine in a little more detail regarding the calamitous prospects arising from the proposed closures of post offices in my constituency and neighbouring constituencies. I am especially pleased that my hon. Friend the Member for Worthing, West (Peter Bottomley) is in the Chamber, because he is a joint victim of the proposals. I am delighted that we have no fewer than two hours and 12 minutes in which to impress on the Minister the seriousness of what faces our constituents.
	If ever there was a subject for a topical debate, it is this, because exactly five weeks ago, on 13 November, the Post Office published a list proposing the closure of 49 sub-post office branches throughout Sussex. In one week, the so-called consultation on the proposed closures will end. That consultation period of just six weeks closes on Christmas eve. This is not the best time of year genuinely to ascertain the views of local people and businesses that will be affected by such devastating closures. The situation is certainly not the best Christmas present for my constituents who are faced with losing post offices that they have been used to using for many years. It is particularly disgraceful that, contrary to Cabinet Office guidelines, which say that it is good practice to provide a consultation programme of at least 12 weeks, we face a truncated period of just six weeks in the run-up to Christmas.
	That is not genuine consultation, and it contrasts starkly with the consultation on the reconfiguration of West Sussex hospitals, which ended just a few days before the consultation on post offices started. The consultation launched by the primary care trust—which, as I say, finished just a few days before we were faced with the shattering news about the post offices—was not six weeks long; it was not even 12 weeks, although it started off as that. It lasted for 18 weeks. It was a genuine consultation that took into account the views of thousands of our constituents across Sussex, who feel strongly about losing vital hospital services—at least I hope that it took their views into account; it certainly provided the opportunity for that to happen. The hospitals and the primary care trust ran an 18-week consultation on hospital services—a period with which we are all satisfied; there were certainly no qualms about the length of the consultation period and the opportunities for people to have their say. Why do local post offices merit only six weeks, and that in the run-up to Christmas?
	On 13 November, we were given the news that no fewer than seven sub-post offices in my East Worthing and Shoreham constituency faced closure. We have already lost about 11 branches in the past few years, so we thought that we would be relatively immune to further closures. Of the seven proposed closures, five will be in the district of Adur, which covers roughly two thirds of my constituency, and two will be in east Worthing. That total of seven is the highest number of closures proposed anywhere in the Sussex division. A further two branches face closure in the constituency of my hon. Friend the Member for Worthing, West. That is the highest number in Sussex by far. Why are we singled out for such treatment?
	That is not the best Christmas present for my constituents, particularly coming on the back of recent news that Worthing borough council and Adur district council face a shortfall in excess of £600,000 in the money needed to run the bus concessionary fare scheme—a scheme that we all support and want to flourish, but for which central Government are not properly remunerating us. It also comes on top of the news, announced just a week ago, that West Sussex will yet again receive the lowest increase in Government central grant of any shire county. It is also on top of the news that we face downgrading of our local hospital services, as I have mentioned. We feel rather put upon in West Sussex, but particularly so in East Worthing and Shoreham, now that we are threatened with post office closures, too.
	My constituents say to me, "What have we done to deserve being treated so unfairly by this Government? If it's not the hospitals, the bus concessionary grant, or the post offices, it's something else. What will we be faced with in the new year?" This year, people in Sussex, who are usually fairly genteel and law-abiding, have taken to the streets and written letters in their thousands to protest at their treatment at the hands of the Government, whether it be in respect of the health service, the transport system, or what is happening to the Post Office.
	It is no surprise that I have just presented a petition signed by no fewer than 5,002 people. Many more signatures will be added in the next week or so, and I shall present them to the Post Office before the consultation ends on Christmas eve. In addition, many hundreds of letters have been written to the Post Office; my hon. Friend the Member for Worthing, West, and I have been copied in to many of them. They concern real-life experiences, and they show that when we talk about the post office closures, we are not just talking about some Post Office number-cruncher dealing with figures in his office, but about real-life experiences and examples of hardship that will be brought upon my constituents. It is no surprise that the public meetings that we have held on the subject so far have all been packed out.

Stephen O'Brien: My hon. Friend makes a compelling case on the difficulties in his part of West Sussex. I am sure that his constituents will find it some comfort to know that they are not alone, and that we face precisely the same problems in Cheshire. I have just delivered four petitions, amounting to more than 600 signatures, which were collected in the matter of a few days. We are talking about people who live in what the Government describe, rather patronisingly, as the shire counties. The Government seem to think that for such people, community life is automatic. It is not; it depends on local post offices and a local commitment to community life. Have he or his constituents noticed that there may be victimisation of shire counties, in the way in which closures are allocated across the country? My constituents have been telling me that they think that the Government despise shire counties, and that the proposals are one way of getting at them.

Tim Loughton: My hon. Friend makes a good point. Of course, he has form on the issue; I followed with great interest his comments in a recent Westminster Hall debate on the Post Office. He mentioned Cholmondeley and other local branches that face closure, and he has just presented, on behalf of his constituents, petitions that are slightly thinner, but no less heartfelt, than mine. He mentioned the Post Office's divide-and-rule tactics. It has tried to pitch one post office against another, on the basis that a set number of post offices are due to close, and if it is not one that closes, it will be the other. Those are despicable tactics. Post offices provide a service to local people; they are not in competition with each other. My constituents are not terribly concerned about whether one branch does better business and is more profitable than another. They are concerned about their branch being there to offer the services on which they greatly rely.
	My hon. Friend makes a good point which applies particularly to rural constituencies. However, that is not the case in my constituency, which is largely urban. The same is true of my hon. Friend the Member for Worthing, West. The half of my constituency, roughly, that is rural and in the downs has very little population. It is mostly populated by sheep. The post offices are based in the urban coastal strip of Sussex, so the closures are not a rural constituency phenomenon, but we are a shire county and seem to be treated unfairly by the Government.
	I do not want the debate to be about the post office closure programme per se. That was covered by my hon. Friend the Member for Eddisbury (Mr. O'Brien) and many other hon. Members in a Westminster Hall debate on 29 November, to which the Minister replied. It was a very good debate, responding to an excellent Select Committee report presented by my hon. Friend the Member for Mid-Worcestershire (Peter Luff) at that time. I share the reservations expressed by many hon. Members across the Chamber during that debate about the arbitrary number of 2,500 post office branches which the Government, in their wisdom, have deemed to be subject to closure and instructed the Post Office that they must close. We share the concern, as we did a few years ago, about whether this is the end of the programme, or whether we will be back in a year or a few years, facing yet another wave of closures We have already cut to the bone. The present round of closures represent cutting into the bone and the bone marrow. Goodness knows what still can face us.
	I also have reservations, which I share with those who took part in the debate, about the lack of transparency about the financial viability of individual branches. Are we closing the 2,500 least profitable branches, or are some only marginally loss-making? In which case, what has been done to see how the deficits could be narrowed, subsidised from elsewhere or helped by future expansion of services? The figures are clouded by the way in which central costs are apportioned, which seems to be some mysterious calculation to which we are not allowed to be privy. Always, when we try to get to the bottom of the figures, we are told that they not available owing to commercial confidentiality.
	I share the concerns that were raised in that debate about the lack of transparency about other hurdle criteria that are being used to justify closures, such as house building forecasts. There seems to be no mention of the fact that in West Sussex we are facing a substantial centrally imposed Government house building target. Thousands of extra homes are due to be built in our constituencies, regardless of the sustainability of the infrastructure available to service them.
	There is also a lack of transparency about population growth accompanying that house building, and a lack of transparency about how deprivation figures are used. Many of us have wards that are among the 20 per cent. most deprived in the country. Furthermore, there is a lack of transparency about how the high pensioner populations that we have in coastal Sussex figure in the calculations.
	I share the concerns expressed in that debate about the sustainability and capacity of existing public transport links to the post offices suggested as alternatives to those that are being closed. In West Sussex we face severe tightening of our budget for subsidising bus links. Invariably, the greatest subsidies go to rural links. In our towns we face the biggest squeeze on those subsidies. Some of the bus routes that, we are told, are perfectly viable alternatives now, may not be there in a year. People will be told, "It's simple. You jump on the No. 9 bus and go to the alternative branch", but in a number of months or years they will not have that luxury, even if it is a practical alternative at present.
	I sympathise with the concerns raised during that debate about the effect that the closures are having on communities. Those communities have already seen wide scale closures of post office branches. In many cases they have seen a retrenching of bank branches and a reduction in other businesses reliant on those financial concerns. I thought that the Sustainable Communities Bill, which the House rightly passed in the last Session, was about the Government standing up for such vital community services, but it appears to feature not at all in the proposals being put forward.

Stephen O'Brien: I am grateful to my hon. Friend for giving way a second time. He is discussing the evidence base for the present round of closures. It seems to emanate from a remarkably round number—2,500—of post offices that are destined for closure. He mentioned the invidious practice of setting one sub-postmaster or postmistress against another, so that if one is saved, another has to go, because there is some absolute determination—almost gesture politics—to get those 2,500 branches closed. I have not seen the evidence base for that, despite the debate that we had on a Select Committee report, no less, in Westminster Hall recently, which he so rightly referred to. In preparation for his remarks this evening, which I am following with great interest and support, did he establish whether the evidence has at last been adduced by the Government to show that that 2,500 is anything more than an arbitrary figure to make sure that they get where they want to get to, without any regard for local communities or their services?

Andrew Murrison: I agree with my hon. Friend that the evidence base is vital. Does he perceive any adherence to the evidence base in respect of rural-proofing the closures? Notwithstanding his comments about the coastal strip, about which he is particularly concerned, the rural-proofing on which the Government are so keen is completely ignored in the proposals. Furthermore, attention has not been given to indices of deprivation in respect of which post offices are threatened with the axe. I share my hon. Friend's concern about the lack of attention to the evidence base. Does he perceive that Ministers have given any attention to it?

Tim Loughton: I do not perceive that, which is why I am keen to give the Minister time to address some of those questions.
	I turn to the subject of deprivation. I cannot answer for the rural side, because my constituency is primarily urban. I understand why the issues may be more difficult for rural areas, in which lots of villages are dotted around and justify a larger number of post offices, but I am talking about a densely populated area that is losing more post offices than many rural areas. That is a phenomenon particularly of shire counties, as my hon. Friend the Member for Eddisbury mentioned.
	I turn specifically to the branches in my constituency that are faced with the Christmas present of closure. As I said, in May the Government instructed the Post Office to embark on a closure programme of 2,500 branches. On 13 November, after a lot of prevarication and false sunsets for postmasters, the details of which branches were targeted were published. I received advance warning of that list just four days before, on 9 November. That was hardly a courtesy; Members of Parliament should be fully engaged in the process. The details came as much of a shock to me then as when they were published fully the following Tuesday.
	I gather that only a few weeks prior to that individual postmasters were told their fates, presented with a fait accompli and sworn to secrecy in an intimidating way. All the postmasters to whom I have spoken—and I visited every one of the seven faced with closure within days of the announcement—were hesitant about speaking out, even to me at first. However, most have now taken up the cudgels and have been at the forefront of some of the protests and marches, because they resent being intimidated by the Post Office in that underhand way.
	As I have said, my constituency is largely urban, so we are not dealing with a problem of far-flung villages. My constituency is also not being hit disproportionately because of the way in which the constituency boundaries fall. For some reason, the Post Office has been told, or has decided, that the closure programme should be announced constituency by constituency, rather than by district council, borough council or county. In my case, the majority of the closures fall in the centre of my constituency rather than merely happening to be a few hundred yards across the border from the next constituency where closures are not faced. The fact that we are being hit disproportionately is not down to the way the constituency boundaries are drawn.
	In Adur, which makes up two thirds of my constituency, we have wards of deprivation that are among the most deprived in the whole of west Sussex and feature in the bottom 20 per cent. of wards of deprivation in the whole country. In my constituency and that of my hon. Friend the Member for Worthing, West, which neighbours it, we have a high pensioner population. I shall come back to that in a minute.
	In Adur, we have 12 post offices, including three Crown branches. Of the nine sub-post offices, five—more than half—now face closure. That is in excess of the 18 per cent. average across the country that the Post Office has reassured us will be the figure for the areas affected. All those post offices are popular, well run, efficient and well used. So I was surprised when the Minister responded to the debate on 29 November with the following comments:
	"We have 800 post offices that serve fewer than 16 customers per week. In those offices, the subsidy per transaction is around £17. We have 1,600 offices that serve fewer than 20 customers per day—the subsidy per transaction in those offices is £8. There are around 1,000 sub-post offices in competition with six or more branches within one mile, and customer numbers have shrunk by around 4 million per week in recent years."—[ Official Report, Westminster Hall, 29 November 2007; Vol. 468, c. 181WH.]
	That is a fair comment. In a response to a written question from me, he wrote:
	"In taking a strategic overview of service provision in areas of over-provision, Post Office Ltd. will ensure that people will be able to find an alternative branch nearby and the vast majority will still be within walking distance of their nearest office. With the least used offices, the numbers of people affected, will, by the nature of the offices, be low. I understand from Post Office Ltd. that under the area plan proposals for Sussex, 99.6 per cent. of the population will either see no change to the branch they currently use or will be within one mile of an alternative branch."—[ Official Report, 5 December 2007; Vol. 468, c. 1339W.]
	How can it be that 5,002 of my constituents so far—substantially more than the 0.4 per cent. that would be left out of that figure given by the Minister—have signed a petition, written letters, come to public meetings and started to march? We are being hit disproportionately.
	The picture that the Minister painted in the debate to which I referred does not represent any of the branches faced with closure in my constituency. It is certainly not a picture that any of the sub-postmasters who face closure would identify with at all. I visited all those branches several times, and I want to concentrate on five of the seven branches faced with closure. Two of the sub-postmasters have resigned themselves to closure. They have had enough. They have had enough of seeing their business taken away from them by the Post Office. They have had enough of intimidation from the Post Office. They want to secure what they can by taking the compensation now, because their future is uncertain and their retirements largely rely on it. One cannot argue with that.

Tim Loughton: My hon. Friend is absolutely right. Many of these sub-postmasters are between a rock and a hard place. They have seen the loss of TV licences, car tax and passports, the reduction in the remuneration that they get for their business post, and the furore over the Post Office card account. They have seen these things being taken away from them, and they have seen their revenues shrink as a result. The Post Office then makes the case that they are much less profitable than they used to be.
	Many of these people have built up and run their businesses over many years, and they were to have provided for them in their retirement. One of the first things that the Government did was to take away retirement tax relief. Those businesses, like many other small businesses, were thus severely hit because they were run by people who had not been able to set up their own pension funds but who had bought into and grown their businesses to use as a pension fund. They hoped to sell them to provide a nice nest egg, and to reinvest the funds for their retirement. They are now faced with a very uncertain future. Understandably, some postmasters—although not the majority in my constituency—have decided to take the money and run.
	I am not saying that I am against all change. Because of competition and the way in which post office services are evolving, those services need to be rationalised. No one denies that. My party has put forward proposals for rationalisation that would secure the sustainability of many post office branches for much longer. However, my constituency has been disproportionately targeted. These post offices are the wrong target in the wrong places. In contrast, the three next-door constituencies that make up the city of Brighton and Hove—a city of about 750,000 people—face a total of five closures. In my constituency alone, the total is seven.
	The closure map that the Post Office has helpfully provided is marked up with red crosses to show proposed closures and green stars to denote the branches that are to be kept. If only this were the hospital proposal map. It has lots of nice red crosses all over it, where I fear that hospitals will be downgraded. The number of red crosses on the map is very alarming. The seven remaining post offices in Adur will serve populations of 8,500 each, on average. That is way above the average for populations in other parts of the country. In contrast, the 15 remaining branches in Worthing—a much larger borough which is also being hit particularly hard—will serve populations averaging 6,666 each. Why should Adur have fewer post offices to serve larger populations?
	I want briefly to touch on those five branches in my constituency which I believe to have been wrongly targeted. The first is the Mill Road branch in North Lancing, an urban community that is set aside on its own in the centre of my constituency. The postmaster is Ali Nahid, who is known and respected by many people. He is one of the postmasters who have been supporting the protests against the closures. He runs a post office that has been there for 138 years.
	The North Lancing residents action group, a particularly well organised and fearsome bunch of local residents who really gauged the feeling of local people, leapt into action and carried out a survey, to which I will return in a few moments. The group had someone standing outside that branch every day for quite a long time. The survey results revealed not 20 customers a week or a dozen a day—which is the case at the sort of post offices to which the Minister referred—but 133 customers using the shop in which the post office is located every single day, of whom 100 use the post office. That is 100 a day, six days a week, using a post office now faced with closure.
	The second post office in my constituency is in Bowness avenue, Sompting. It is run by Carol and Brian Attwater, who were again at the forefront, literally and physically, of the protests of recent weeks. They have two full-time post office desks in the shop as well as the post office counter, and every time I have been there I have seen that both those desks have a queue. The postman who picks up the post from that branch says that he picks up more post there than goes to the main branch in Lancing—the alternative branch, which will be the only Crown post office left serving that whole district. This is not a branch where somebody occasionally ambles in to buy a stamp and ambles out; it is a very busy, well run sub-post office.
	The third branch, the Downlands sub-post office in east Worthing, is run by Michael and Rosemary Wilkins. That branch won the post office of the year award in 2004 and a Royal Mail innovation award because it was obviously doing so many things right in the eyes of the Post Office. Over the past few years, business at that post office has increased, not decreased, even with all the different aspects taken away. The business transacted at that post office has increased and considerable investment has been made in reinforcing the counters and the whole post office paraphernalia—not least because we have had some violent raids in some Worthing sub-post offices in recent years. Again, we are talking about a well used post office, but once again that was not reflected in the Minister's comments in the debate of 29 November.
	The fourth is the Old Shoreham post office run by postmistress Karen Crook. Again, it is a busy branch. There are several sheltered accommodation blocks just across the road, and the number of over-85-year-olds in the ward is 50 per cent. above the national average. I remind the House that in neighbouring Worthing, 4.6 per cent. of the population is above 85. This is the highest concentration of over-85-year-olds in the whole country, if not Europe, if not the universe—perhaps. We have a very high concentration not just of elderly but of very elderly people whose mobility is limited and who rely greatly on post offices like these. Campaigners trying to save that post office have also cited provisions from the Disability Discrimination Act 1995, as we believe that those people are being discriminated against in the lack of access they will have to the alternative post office branches.
	The fifth branch is the Broadwater Road Parade branch in Worthing, run by Mr. and Mrs. Myring. I said earlier, and my hon. Friends interjected on the same subject, that we are concerned about the quality of information used as the basis of these decisions. I found those concerns to be justified when I first visited this branch. Furthermore, the official posters issued by the Post Office for display to notify customers of the closure proposals referred to the Parade branch in Worthing in East Sussex, yet Worthing is in West Sussex. Clearly, the Post Office does not even know the location of its own branches. I have to say that its decisions are based on some rather dodgy data.
	We are also greatly concerned because we were told by the Post Office that researchers—we do not know when; perhaps in mufti at the dead of night—had been visiting these post office branches to do their research on viability. Not a single one of the postmasters I spoke to had met any of those researchers. None of the researchers had revealed themselves to the postmaster or any of his staff in the branches concerned. Nobody had been spoken to locally. What sort of research are those people supposedly gathering?
	Although the full figures are not published because of commercial confidentiality, postmasters tell me that more than half the revenue in the branches I have mentioned comes from the post office part of the business. All those branches are situated in shops. It is a common claim of the customers that the quality of service at those sub-post office branches is far better than that at the main Crown post office branches, which they will now have no alternative but to use, and that their accessibility is also greatly superior.
	I will now hone down to the Sompting-Lancing area in the centre of my constituency. It is faced with the closure of not 18 per cent. but 60 per cent. of its post offices. Lancing—the largest parish, and technically the largest village in the whole of England—and Sompting, which merges into it, have a population in excess of 29,000 people. The vast majority of those people will now have access to one main Crown post office, in the middle of a very busy urban village. There will also be a sub-post office out on a limb servicing another part of Adur. That Crown post office is already overwhelmed, even without the extra business that it will have to subsume from the three post offices faced with closure.
	That branch is the alternative now put forward by the Post Office. Last Monday, I was told that the typical waiting time in queues at that branch was at least 25 minutes. The Post Office was also surprised to hear that the policy of that main branch is that nobody is allowed to bring more than five parcels in one go; if they do, they must rejoin the queue and present the rest of their parcels 25 minutes later. Just down the road, however, is one of the largest business parks in West Sussex, with no fewer than 160 businesses with a lot of parcel post. What are they expected to do? At the moment, they are well served by the sub-post offices.
	The main branch in Lancing also has very limited parking, which is already at a premium, particularly within close walking distance of the post office, and no disabled parking close by. At the branches threatened with closure, particularly at Mill road in Lancing and Bowness avenue in Sompting, parking outside is easy. As I said, nearby Lancing business park has a lot of business postage that relies on those sub-post offices. Not surprisingly, every single one of those businesses that was approached to sign the petition, which I handed in earlier this evening, signed it readily.
	The closure of those sub-post offices also has a knock-on effect on surrounding businesses. That issue has been discussed by those involved in Sompting village hall, who are filled with horror at the prospect of losing post office branches locally. They say, in reference to the Bowness Avenue branch, that the Bowness Avenue retail precinct is Sompting's only significant neighbourhood shopping centre, and that it is already in decay, with one unit vacant and three occupied by businesses usually associated with run-down facilities—printers and janitorial supplies. They also say that the loss of the post office would further greatly reduce the appeal to and income from local shoppers, while a reduction in the cross-selling that arises in such centres would further threaten the businesses themselves and hence the communities that they serve.
	On the effect of the closures on communities, Adur district council has produced a detailed paper which was discussed at a full council meeting at which resolutions were passed objecting to the closures. Let me quote from one paragraph in the paper that refers to the impact of the last wave of closures on my constituency in the Adur district.
	It states:
	"There have already been branch closures within the Adur District in 2004/05. One of the areas the impact of this was most marked was in Fishersgate",
	which is on the border with Hove and Portslade. It continues:
	"The loss of such a vital service has fuelled concerns by the community about the general erosion of community based services affecting the social and economic life of neighbourhoods and has been further compounded by the withdrawal of public transport from the area. There is a fear that future Post Office closures may catalyse the degeneration of neighbourhoods. It remains important to local communities and local businesses that Post Offices are not closed where they are needed most."
	What happened in Fishersgate, probably the most deprived part of my constituency, and a community that felt really put upon? Last year, its school faced closure. Fortunately the county council saw sense, and after a fantastic campaign by staff and local parents, in which I was involved, the decision was overturned. A few months later, the school went on to win the title of school of the year in the south-east region. That was an important sign for the community, because the previous year it had lost its post office, the shop in which the post office was sited, and most of the shops neighbouring the post office. Residents felt that the heart of the community had been ripped out.
	That is what happens when a post office goes. People do not merely say, "Oh, we have lost a post office; now we'll have to drive a mile to a new main post office." It means the loss of the heart of a community to people who have relied on the post office as a community focus, and to businesses which have relied on it for their purposes. That is what happened in the most deprived part of my constituency, and history will repeat itself if the closures proceed in the form that is being suggested.
	Let me say more about the deprivation factor. According to Adur council's paper,
	"the access criteria accorded to deprived urban areas...are disappointingly only with regard to the 15 per cent. most deprived Super Output Areas (SOA's). Adur does not have pockets of deprivation at these levels but however we have several SOA's which fall into the 20 per cent. most deprived. Most notably the communities of Churchill Ward"—
	in Lancing—
	"and Peverel Ward"—
	in Sompting—
	"who would access Bowness Road in Sompting. This is particularly an issue for Adur given that areas of urban deprivation generally exhibit isolation, poor transport links, and poor provision of and access to local services, and are therefore the places in which Post Offices can perform the most valuable social and economic role."
	The citizens advice bureau has produced an interesting paper giving figures relating to usage. According to a survey that it conducted:
	"Thirty nine per cent. of respondents visit the Post Office several times a week or more. This rises to 47 per cent. amongst those receiving means-tested benefits and 50 per cent. amongst people aged over 65".
	Members can imagine the impact on the communities that I have described. The survey also found that the
	"majority of people (74 per cent.) currently walk to the Post Office branch that they use most often".
	That is the sort of exercise that the Government, and indeed all of us, wish to encourage, but many people will now have no alternative but to seek less healthy modes of transport.
	The Post Office is also guilty of citing misleading travelling distances when it tries to claim that the vast majority of people will still have access to a post office branch within a mile of where they live. That is all very well for those who live in the post office in Bowness avenue, Sompting, or the one in Mill road, Lancing, but many people live to the north or the west of those branches. A large number of my constituents in parts of Lancing and Sompting will be faced with round trips of not 0.9 miles but up to four miles, not as the crow flies but as people walk—safely, we hope, but crossing main roads. That is what will be required of a population containing higher than average numbers of elderly and deprived people. That is the reality of what the Post Office seeks to do, notably in the case of the Mill Road post office branch in Lancing. I hope that the House is forming a good picture of my constituency, particularly the part of it that is in Adur. The north Lancing post office branch is up a steep hill.
	To access the surviving main post office in Lancing, people will have to cross the A27—one of the most congested and dangerous roads in Sussex until a few years ago, when the Highways Agency saw sense and built a pedestrian crossing. In the previous 14 years, 13 people had been killed, many of them students at the school that abuts on to the A27.
	Using that footbridge will add another mile to the journey, or one can take one's life in one's hands and use the zebra crossing. Ivan Fallon, a resident of North Lancing, and his volunteers surveyed the alternative routes to the main post office. They found that 134 customers used the shop every day, of whom 100 used the post office. Those 100 were asked what they would do if the post office was not there. Eighty-four said that they would drive to the main post office; only 16 could face the prospect of walking.
	Those people would have to use a pedestrian crossing at which, it was calculated, up to 40 vehicles are held for 20 seconds on average. There will be quite an impact on the traffic flow of that main road. Mr. Fallon and his team also calculated that those additional car journeys to the local post office would generate an extra 25 tonnes of greenhouse gases per annum. Offsetting that environmentally would require the planting of 31 acres of trees every year. Mr. Fallon is a bright man and I would not challenge his figures.
	Such environmental considerations feature nowhere in what we have heard from the Post Office. What environmental criteria have been used? The answer apparently is none. The Post Office appears to be immune from climate change and to have no responsibility, liability or duty of care to consider the carbon footprint of its proposals. That is bizarre. At a time when we have seen so much about the progress made at Bali, at home in the real world people are faced with increasing their carbon footprint because, apparently, the Post Office does not give a damn and does not have to give a damn about environmental considerations.
	What discussions has the Post Office had with the Highways Agency about the extra traffic on the A27 alone? We do not know; we have not been told. What discussions has the Post Office had with the highways authority, the county council, regarding the extra parking that will be required? We do not know; we are not told. What discussions has the Post Office had with Adur district council on the provision of extra car parking and disabled car parking? We are not told, we do not know and Adur does not seem to know how it features.
	What discussions has the Post Office had with the police? At one of our public meetings, two local police community support officers came along and, unusually for people in uniform, were moved to get up and say that if the Mill Road post office went, it would seriously impact on their jobs. These closures have implications way beyond some people having to walk a bit further to buy their stamps.
	This is happening without any guarantees about the capacity of the remaining post offices, particularly the North Road post office in Lancing, to cope with the existing demand. A common cry at the public meetings has been that the 400-odd Crown post offices are losing about £70 million. Most of my constituents would rather close the Crown post offices and keep the sub-post offices open because they provide a better, more efficient service in places where the public actually want to use them—but we are not given that option. Can the Minister tell us why this is so weighted towards closing popular sub-post offices?
	All this is happening without any guarantees about the accessibility of the North Road branch to customers, the availability of parking and the sustainability of public transport or any consultation on disability access. As I said earlier to my hon. Friend the Member for Worthing, West, apparently we are not to benefit either from the 500 outreach services that are being offered as a sop to other parts of the country that are faced with losing their post office branches. All this is happening without the Post Office having any obligation to consider environmental factors in relation to the closures. What has been the impact of the Sustainable Communities Act 2007, under which the Government are to consult local authorities about promoting local sustainability, including maintaining local services such as post offices? Was it all a waste of time?
	I also want to quote further from the excellent Adur study prepared by Natalie Brahma-Pearl of the healthy living department. She truly gets to the nub of some of the problems we face.
	"The access criteria has fundamentally been applied to mislead. It makes no reference to the fact that some residents in existing Post Office catchments are already travelling a mile to the proposed closure Post offices and the reference to distance to alternative in the consultation plans is misleading. For example if a resident were to live in Cokeham Ward or North Peverel Wards in the Sompting area of the district then for them to actually access their nearest proposed alternative in North Street Lancing would in fact be nearer 2 miles and not the 0.90 miles quoted."
	We should also consider the demographics of those wards affected by the sub-post office branch closures. In the St. Nicolas ward in Shoreham the proportion of over-65-year-olds is 23 per cent. compared with the England average of 15.9 per cent. In the Sompting wards it is 21.7 per cent. In the South Lancing ward of Widewater it is 27.7 per cent. Areas with well above average age demographics are affected by the proposed closures.
	Let us also look at how these post offices interact with the local council. The payment of council tax and rent is one of Adur district council's largest services, available at local post office counters through the use of payment cards as well as at a number of local shops. That is consistent with Department of Trade and Industry proposals, as detailed in another part of the report.
	"In the first six months of 07/08 approximately £1 million of Council Tax has been paid this way and £500,000 rents have been collected using this method. Approximately 25 per cent. of Adur's Council Tax transactions are paid over the counter. Should more Post Office branches close in the District, this may impact on the Council's ability to offer our own services in local neighbourhoods."
	Again, there will be an impact on the local council, when it is trying to do what the Government are urging it do—use local post offices. There will be an impact on the council's ability to service its tenants and its council tax payers properly.
	The final paragraph of the Adur report states:
	"Following previous closures in the Adur District, the access criteria determined by the DTI, suggest that the network as it now exists, is the barest minimum needed to provide a proper and effective Post Office counter service to our local residents. Further closures are not substantiated or justified in any part of the district as these would result in a significant loss of essential local facilities for a large proportion of our resident and business population. This is especially the case for Post Offices in the Sompting/Lancing areas, in particular Bowness Road, Sompting."
	Those are the words not of a politically motivated local council, but of an officer of my local council in Adur who does her job well and knows her area particularly well, and who knows the impact it will have on our populations.
	Similar comments have come from Worthing borough council. It recently passed a motion that reads:
	"This council further notes the social importance of local Post Office outlets to the well-being of individuals and communities in Worthing. It believes that the latest closure programme is unnecessary and calls on the Government to",
	among other things:
	"Remove the Royal Mail restrictions on the Post Office to open up further business opportunities for the network".
	So these proposals have no support. Until now, I have not relied on the perhaps more emotional testimonies of my constituents and individual people within Worthing and Adur. I could have done—I could have quoted from scores and scores of letters that I have been copied in on, as has my hon. Friend the Member for Worthing, West. Up to now, I have relied on the practical considerations of these post office closures for my constituents, my communities and my constituency, such as traffic and parking, alternative destination distances, environmental concerns and the impact on communities.
	However, I want to read out a few of the comments received in those letters. Perhaps, Mr. Deputy Speaker, you will indulge me. These are real-life experiences of people who are not politically motivated; in many cases, they have never written to their MP before, or to the Post Office. The first states:
	"I am in my late seventies and am the sole carer for my eighty four year old husband who has Alzheimer's Disease, Fibrosing Alveolitis and Heart Failure. He is on continuous oxygen so is totally housebound and cannot be left for more than a few minutes. The Post Office is an absolute lifeline for me. I can only walk a limited distance and would have to drive to use the main Lancing Post Office. Queues there are long, with no place to sit and there is no convenient parking."
	Another one from Lancing says,
	"the return journey"—
	to North Lancing—
	"is all uphill, in many cases very steep, and the buses do not venture 'up the hill'.
	If I am to continue to live independently, the only way I will be able to obtain any cash, will be to take a taxi, or ask one of my friends or neighbours for a lift to the village"
	every week.
	Another one from Lancing states:
	"Parking is a nightmare in Lancing plus you need to pay for parking if you can't find a place on the road, which I never can. The bus service does not come up the top of the hill where I live, also again the cost is already expensive."
	Another one states:
	"The shop"
	in which the post office is sited
	"provides a service available to all the residents in North Lancing along with the shops in Manor Road. Without this shop the area will be degraded and certainly downgraded."
	Another one, from a pensioner:
	"Many might queue for 35 minutes in the Post Office and then find that they have missed their half-hourly bus home and have to stand for another 30 minutes."
	A further one states:
	"I am an 86 year old lady who is registered blind and with limited mobility...To use this Office means that I will have to cross the very busy A27 road to catch a bus. The crossing allows 75 seconds for pedestrians to cross, unfortunately due to my problems I have difficulty crossing in this time.
	I have all my money in the Post Office and my pension is paid into it. Due to there being no Banks in close proximity, I cannot make alternative arrangements to have my pension sent anywhere else so I am forced to use the Post Office."
	Another one, from Sompting:
	"There are five sheltered housing complexes south of the line as well as large estates of bungalows mainly lived in by pensioners...there is no public transport to North Road from the main South Lancing area."
	Another states:
	"North Lancing is on a hill which means walking up the hill to get home as the bus service only comes just into North Lancing and does not come up the hill. This will cause hardship to a lot of people."
	Here is one from a business:
	"It seems the Royal Mail are trying to accelerate, and not reverse the 'falling customer numbers, decline in traditional services such as Government based business, changing consumer behaviour and rising losses in the Network'. I for one will have no choice than to do my bit and hasten your demise."
	Another one, from Worthing, states:
	"I am horrified at the thought of closure of the Downlands Post Office and the impact it would have on the neighbourhood...Mr. and Mrs. Wilkins give an outstanding service to the community and deservedly won one of your national awards in 2004."
	Another one from Sompting:
	"This is the only Post Office in a large area where it is possible for disabled drivers to park."
	Another one from Lancing—I am almost finished, Mr. Deputy Speaker:
	"The waiting time in the queues is already often 20 minutes or more at busy times, even when all the counters are open".
	So how are the remaining post offices going to have the capacity to cope?
	Another letter from Sompting states:
	"We do not want to see another parade of smart well kept shops reduced to flaking paint, battered shutters and vandalism."
	Another letter states:
	"No wonder that the local community spirit is dying and people are becoming more and more isolated."
	Finally, someone from Sompting comments:
	"To close a branch whilst spending huge amounts on television advertising, calling it 'The People's Post Office' is pure stupidity."
	The "people's Post Office" advertising campaign adds insult to injury, as does advertising the Christmas club that the Post Office is going to offer, when my constituents face losing the majority of their sub-post offices and will not be able to access such services. Everyone is up in arms, including the local media. The  Shoreham Herald and the  Worthing Herald have as usual played a fantastic part in covering and supporting this campaign, and Splash FM, the Worthing radio station, has, as ever, been supportive of the local communities.
	People are in shock over these proposals. Local residents, businesses and the sub-postmasters are shocked. Even Postwatch and the National Federation of SubPostmasters, which is based in Shoreham in my constituency, admitted to me that we are being hit disproportionately. Postwatch was very unhappy with the way that the proposals affected my constituency and believed that it had almost been misled in the way in which the evidence had been put forward to it. Even the Post Office representatives who came to see me when the closures were announced admitted to the disproportionate effect that the closures are having on my constituency.
	The fate of these post offices is in the hands of the Minister. The Government have instructed the Post Office to make 2,500 closures, so he cannot simply pass the buck to the Post Office. I hope that the consultation programme, albeit truncated to six weeks, is a genuine one. I say that because a recent letter in Brighton's  The Argus referred to the previous time that the closure programme was threatening post office branches—in that case, Brighton was affected. The writer stated:
	"The Preston area of Brighton had three post offices closed in 2003."
	He then mentioned a public meeting held to try to save those branches, saying:
	"The Chairman of Postwatch and Post Office managers were at the meeting. They said all the letters and petitions would be carefully considered. However, there was a reporter from The Argus at the meeting who revealed that the Post Office had already released a press release giving details of the final closure dates for all the threatened post offices...All of this happened within a few days of the final day for objections so there could not have been any meaningful consideration of the objections from residents."
	I hope that the Minister will satisfy himself that I am being too cynical in suggesting that the decisions have already been made and that the consultation exercise is a token and tick-boxing exercise. Such an exercise would be an enormous insult to the 5,002 people who signed the petition that I just handed in and to the many hundreds who have written letters and turned out in support of these post offices. I am not optimistic, because a similar exercise took place in Kent earlier this year. I believe that only two decisions have been rescinded in respect of the 58 Kent post offices faced with closure, and that only two decisions were rescinded in respect of 71 in the west midlands.
	Is the consultation genuine or not? Does any of the information presented and the case that I have made in the past hour and six minutes count with the Post Office? Will it count with the Minister? Will he at least give a guarantee that he will ensure that the Post Office is not just sifting through these letters and petitions rather laboriously and taking no notice of them, but is genuinely taking into account the very special considerations why some—not all—of the post offices faced with closure in my constituency should have their decisions reviewed. If the Post Office genuinely is to be called the people's Post Office, the Minister owes it to the people to give ownership of some of the decisions to the customers who use and rely on those post offices. They have a right to continue to rely on a very important community service.
	I hope that the Minister will take these comments on board fully and give my constituents, who are faced with losing their post offices in East Worthing and Shoreham a happier new year than the bleak Christmas prospect that they face as this consultation ends a week from today.

Peter Bottomley: I am grateful to my hon. Friend the Member for East Worthing and Shoreham (Tim Loughton) for letting me join in his debate and I am delighted that the Minister has been listening attentively. If he is free on Thursday, will he come to the meeting with the Post Office at the Broadwater parish rooms in the centre of Worthing. My hon. Friend and I will be there. I am sorry that the Post Office has not been able to come to an earlier meeting, although two of their representatives did join my hon. Friend and me for a discussion at the beginning of the proposals.
	Can the Minister confirm that one of the reasons why the Post Office network is under such pressure is that a former Secretary of State for Social Security agreed with the Treasury to give up the £400 million income that the post office network received for helping to pay out money? One of the reasons why that matters a lot in Worthing—although it could be copied in 300 other pairs of constituencies as this terrible programme rolls out—is that people over 85 are not those who get their car licences on the internet or who can get their money conveniently when they go out to work. At 85, relatively few are working. They are the people who are well represented by my hon. Friend and by our local media. I join him in paying tribute to our local papers, the  Worthing Herald, the  Lancing Herald, the  Littlehampton Gazette, the  West Sussex Gazette and  The Argus, and the radio stations. Local people buy their papers at the post offices, as well as doing their transactions. Most of them do not take out fistfuls of £20 notes. They take their money in £5 and £10 notes because they do not want to be mugged on the way home.
	I shall not repeat the points made by my hon. Friend, but I wish to add one or two points. First, I remind the Minister of Pythagoras. If one walks east for 0.6 miles and then north for 0.8 miles, that gives 1 mile because the Post Office measures distances as the crow flies, but it is actually 1.4 miles—c(2)=a(2)+b(2). As my hon. Friend points out, a person may already have walked to the first post office. When we walked with his constituents from the Bowness Avenue post office to the next nearest, we had to go north then east, because we could not go north-east. It took well over half an hour and we walked past two closed post offices on the way.
	This is not a new process: it is the continuation of a process that has closed seven post offices in my constituency. There are still people in Ferring, Rustington, Goring and central Worthing who deeply regret the decisions that were made then.

Peter Bottomley: Other people are concerned by the proposals, including Henry Smith, the West Sussex county council leader. He says:
	"Of these closures, three are rural post offices, the others are in urban areas, with a concentration on the coastal strip."
	Why are we targeted the whole time? It is not only that the constituencies have Conservative Members of Parliament. I am glad to say that the Liberal Democrats locally have an online petition and in the end supported the all-party motion on Worthing council.
	John Livermore, the chairman of the Worthing county councillors' committee, says that the proposal will cause extra congestion on the roads. If it is true that three quarters of the people who use our post offices walk to them and if it is true that fewer than a quarter will walk to the alternatives, the Minister will deliberately be creating extra traffic. He should say to the Post Office, "You have the freedom, if you judge it right, not to close the Heene Road post office." That post office is in the centre of not just the constituency that has perhaps the highest proportion of over 85-year-olds in the country—it is what the whole country will be like in 20 years' time—but probably has the highest proportion of any ward in Worthing. The area has a very high proportion of people who are reasonably active and who can get to the local post office, but who will find going along Rowlands road much more difficult. The Minister may say that the distances involved are not the greatest, but let us remember that most of the pensioners who go to the Heene Road post office come in from the west and have probably already walked half a mile to get there. They are within the limits of how far they can easily get.
	There are different arguments for The Strand post office, which is sited where a post office really matters. It is near to Worthing college where many young people go for their sixth-form and further education, to Lloyds TSB Registrars where 2,000 people work and to the headquarters of the primary care trust. Just over the railway, 800 people work on Inland Revenue business both directly for Her Majesty's Revenue and Customs and for the consultants who are developing its software. In addition, there are many people in that residential area and they will have to go from The Strand to George V avenue in Goring. I will go with the Minister if he would like to volunteer for that walk, but if he comes down on Thursday, he will have to allow extra time because of the traffic jams that already exist. It is not an easy walk from The Strand to George V avenue and the first person I consulted when I left The Strand post office was blind. He said that he would not be able to go to the post office at Limbrick corner on Palatine road or to 292 Goring road, which is another option suggested by the Post Office. The alternatives are totally impractical for the people in that residential area or for the people who come to The Strand because their work or education takes them there.
	Will the Minister kindly tell the Post Office that it has the freedom to make decisions based on a judgment of the local circumstances? It may have been required to put forward an average of four closures for each constituency, but it does not have to carry them through if he will allow them that option.
	I have referred to local people and I wish to quote from a letter from Judy, who lives in Goring, an area where the local Liberals did most of their petitioning. Goring does not have a post office under threat at the moment, but Judy says that, although her own post office is not threatened with closure, she is concerned about those in my constituency and in east Worthing. She says:
	"The nation is being encouraged to use motor vehicles less and to walk and cycle more for health. Closing post offices within walking distances, particularly for those who find walking difficult, will lead to people returning to motor vehicles. Some may cease to go out at all, increasing their dependency on either friends or Social Services.
	Worthing, in particular, was planned to have separate parades of shops providing facilities for each small community."
	That is the kind of "sustainable community" language that the Government use as propaganda. I do not think that they believe in it; we used to do similar things without using the propaganda terms. Judy says:
	"These parades have largely survived...they should now be coming back into considerable use."
	We have heard about banks closing their branches, but Judy says that she uses her local post office more and finds that there are frequently queues and not just in the run-up to Christmas. I remind the Minister what happened when the post office in Bath place in central Worthing closed, people had to queue even in the rain for 20 minutes at the main post office at the corner of Chapel street and Union place. That post office is between the constituency office and my home in Worthing, and it is a crying shame to see people getting drenched in an area where they cannot park. However, if they have parked their car, they have to ask themselves whether to put money in for 10 minutes, half an hour or for 40 minutes. That is the sort of question that people have to face.
	Judy ends by asking how the remaining post offices will cope with more customers and notes that the staff will probably lose the knowledge of those who require special attention: the deaf, those with learning difficulties, people who are physically slow and those who have no
	"obvious sign to mark themselves as needing consideration from strangers."
	The Minister has a bit of explaining to do, but he should realise that what he has heard in this debate may be repeated in all the other constituencies around the country. East Worthing and Shoreham and Worthing, West are leading the country not just in the number of elderly people that they have, but in the fight that we have described. I hope that the Minister will join us and give us words of comfort and then say to the Post Office, "You can rescind these decisions. Let the people on the south coast and in Worthing and district have the facilities that they want."

Patrick McFadden: I congratulate the hon. Member for East Worthing and Shoreham (Tim Loughton) on securing this debate on post office closures in his constituency and I congratulate the hon. Member for Worthing, West (Peter Bottomley) on his short contribution.
	As I said in the debate on this issue a few weeks ago, I understand that this is a difficult process that causes concern in local communities. It has been a difficult decision. Like the hon. Members, I appreciate that the Post Office provides an important and valued service in local communities. It is also a service that has evolved and changed over time. As the hon. Member for Worthing, West said just a few moments ago, the number of post offices has been falling for some years. There is a reason for that—however difficult this matter is. The service is being used by fewer people than before and is losing significant amounts of money. There are 4 million fewer people going through the doors of post offices every week than there were just a couple of years ago. The network loses several million pounds a week. Of the just over 14,000 post offices in the network, three out of four lose money.
	If the network were run on a purely commercial basis, which we do not believe it should be, the number of post offices would be about 4,000—not 14,000—with perhaps some more living on the margins of commercial viability. However, that is not the way that we think the Post Office should be run. As I said in the previous debate, there are also some 1,000 sub-post offices competing with six or more branches within a mile of them for the declining number of customers.
	So why is the number of customers declining? Why is the Post Office losing money? A big part of it is down to lifestyle change. People gain access to their money in different ways from before. They often pay bills in a different way. Particularly in the last few years, the way in which people communicate with one another has gone through a technological revolution. Let us take the example of pensions. Eight out of 10 pensions are now paid directly into bank accounts. For new pensioners, the figure is more like nine out of 10. Reference was made to some of the online services—for example, paying car tax. The option of paying car tax is still available in several thousand post offices, but now that the service is available online, it is used by about 1 million people a month. Almost half those people use the service outside normal office hours.
	Those kinds of changes are unlikely to be reversed. Of course, as the hon. Member for East Worthing and Shoreham said, and as I entirely accept, they do not affect everyone. Not everyone is online. Not everyone chooses to pay their bills by direct debit. But the changes are real and have an impact on the pattern of custom at post offices. They are part of the reason why customer numbers have been in decline.
	I acknowledge that there is also a cost element. It costs the taxpayer about 1p to pay a benefit or a pension directly into a bank account. It costs the taxpayer about 80p if the same transaction goes through the Post Office card account, while it costs the taxpayer about £1.80 a time if that is done by girocheque. A Government of any colour would look at those figures and add them up for the millions of pensions and benefits that are paid every week and year.
	As I said, the Government do not regard the Post Office as a purely commercial service. In fact, they are investing some £1.7 billion of taxpayers' money up until 2011, including an annual subsidy, which did not exist in the past, of about £150 million. However, even with that large public subsidy, it was necessary to reduce the size of the network. That point was recognised by the National Federation of SubPostmasters. At the start of the process, its general secretary said:
	"although regrettable, we believe that these closures are necessary to ensure the remaining post offices thrive in the future".
	Reference was made to the compensation paid to sub-postmasters and mistresses leaving the network as a result of the programme. I do not accept the notion that the payment of that compensation somehow represents intimidation.

Patrick McFadden: The hon. Gentleman raises two points. I am making the point that I think that it is right to recognise people's service though the financial compensation process. That is a managed process for reducing the size of the network, and it is in contrast to what happened in the past, when people were leaving in an unplanned way, without access criteria, and thus leaving holes in the network. He also mentioned petitions, and I am sure that the Post Office will take all representations on the process into account.
	I spoke a bit about the lifestyle trends behind declining post office customer numbers. Those trends are unlikely to go away—in fact, they might well intensify. That creates a challenge for the post office network. The answer will be not turning back the clock to the situation some years ago, because these technological changes will not go away, but giving people new reasons to use post offices and offering a range of services that will make them the local provider of choice.
	I recognise that the process is difficult for the local communities affected, but even after the programme is over, the post office network will be bigger than that of all the banks put together. The network will still be some three times bigger than the top five supermarket chains combined, and it will still have an unparalleled reach into every corner of the UK, both urban and rural.

Patrick McFadden: Yes, as the crow flies. Deprived urban communities were originally defined as the bottom 10 per cent., but as the hon. Member for East Worthing and Shoreham rightly said, it is now the bottom 15 per cent. Some 99 per cent. of the population in such areas should be within a mile of a post office. In rural areas, 95 per cent. of the total population should be within 3 miles. We are talking about the nearest post office within a radius. That is how the access criteria are worked out. I hope that that gives hon. Members clarity on the points that they raised. The Post Office is supposed to take into account other factors, such as whether there are motorways in the area, public transport availability, local geography and so on. It has to take a number of factors into account in applying the access criteria.
	The hon. Member for East Worthing and Shoreham asked about the length of the consultation period. The Government consulted for 12 weeks on their overall proposals for the post office network, which were published a year ago. The consultation considered the principle of whether there should be post office closures, and the new outreach proposals. The hon. Gentleman asked about the six-week consultation period; the same period was used in the last round of planned closures, during a process called urban reinvention. The consultation is preceded by discussions between Post Office Ltd, local postmasters, local authorities and so on. So the whole process in each area takes significantly longer than six weeks, and the process of pre-consultation helps to frame the proposals before they go out to consultation. The process across the country will take about 15 months from start to finish.
	The Government were mindful of the views of the National Federation of SubPostmasters, which said:
	"To minimise distress amongst sub postmasters, it is important that the local consultation process is carried out sensitively and speedily. Prolonging decision making regarding sub post office closures will blight the business as well as creating a stressful environment for sub postmasters".
	Uncertainty has been a factor. That is why we have come up with a timetable.
	The hon. Member for East Worthing and Shoreham described a number of ways in which the proposals will affect his constituents and his constituency. In addition to the access criteria, there is an important role for Postwatch, which he mentioned. There is the possibility of a three-stage review process for contentious cases, which will take place when Postwatch and Post Office Ltd disagree about individual decisions. He inferred that that was the case with one or more of the proposals affecting his constituency. Post Office Ltd announced recently that in cases where no agreement can be reached between Postwatch and Post Office Ltd a review process will take place through several levels. At the final stage, Allan Leighton, the chairman of the Royal Mail Group, will review the issues before reaching a final decision. If it is helpful to the hon. Gentleman, I am happy to send him the press release announcing the review process, which was issued a couple of weeks ago.
	With reference to the consultation and its boundaries, the basis of the process was set out clearly by the Post Office before the process began in the letter circulated to MPs. That letter stated:
	"As you will understand, the consultation in respect of the Local Area Plan will not concern the principle of the need for change of the Network, nor its broad extent and distribution... Rather consultation will be seeking representations on the most effective way in which Government policy—as set out in the Response Documents—can be best implemented in the particular Area in question."
	The Post Office was clear about the nature of the consultation even before the process began.
	The first area plan went out to public consultation on 2 October. Eight consultations have now closed and four are currently open. The first final closures were announced last week, although none will take place until after the Christmas holiday period. Under the current timetable, the final consultations are due to be completed by October 2008 and it is intended that the whole process should be concluded around the end of next year.

Patrick McFadden: We have set the overall framework to reduce the size of the network by about 2,500, so that would happen in some cases. It would not necessarily happen in every case; reference has been made to the proposals for elsewhere in the country where one or two decisions have been changed. Sometimes that will happen. The point to remember is that the costs to be considered include the costs of the individual sub-post offices and the support costs for the whole network. The Post Office is seeking not only to close the number of branches that has been set out, but to reduce its central costs as well. If the number changed hugely, the Post Office would continue to face the losses that it currently faces.
	As I said at the beginning, the process is not easy and I understand the concerns that have been raised this evening. I have to inform the House that I am afraid that I shall have to decline the invitation extended to me to visit the constituency of the hon. Member for Worthing, West on Thursday. Post office closures have been happening for some years and they are also happening in some other countries. However, we have tried through the process to manage the reduction in the size of the network, and to ensure compensation for the hard-working sub-postmasters who have served communities so well.
	I hope that the new access criteria and the investment over the next few years will mean that the programme, while it reduces the size of the network, will give the post office network some financial certainty as it goes forward to plan its future.
	 Question put and agreed to.
	 Adjourned accordingly at Ten o'clock.
	Correction
	 Official Report, 13 December 2007: In columns 539-41, delete division and insert the following:

Question put, That the amendment be made:—
	 The House divided: Ayes 117, Noes 248.

Question accordingly negatived.